Subprime borrowers scattering plastic sharks on the lawns of Countrywide's regional managers strikes me as an entertaining exercise of First Amendment rights.

I once bought a house from a builder who tried to screw me. Unfortunately (for him), he had several more lots and homes to sell in the subdivision. The modest billboard that I erected in our front yard, proclaiming our dissatisfaction with the builder, quickly adjusted his attitude and got us the satisfaction we contracted for.

But let me ask. Where there is evidence of outright fraud by a subprime lender or its marketing agents, the law already provides that such misconduct is criminally punishable, and/or answerable to a suit in tort by the damaged borrower. So what is Morgenstern advocating? Presumably subprime borrowers need not read the papers they sign, nor repay the loans they get, because it is far easier to paint subprime lenders as predatory.

Morgenstern's view typifies the sad descent to which she and her ilk would lead the American republic, built on self-reliance and a will to succeed, to a lowest common denominator mode of doing business, which might as well be no business at all.

Bah.

Fred,

With all due respect, there was PLENTY wrong with Morgenson's article, but you did not characterize her main arguments accurately. It seems you have enough distaste for the subprime discussion (witness your admission that you haven't been following it) that you misread her story.

Her main beef was the aggressive upsell, that customers who qualified for prime loans were steered into subprimes, and that was done systematically, and was clearly policy.

This IS a big deal. I know law firms (respectable ones, not the usual class action shops) that are readying false advertising claim suits against Countrywide. This is fraud, and the law takes a very dim view of that.

And per the comment above, I beg to differ. Even the Wall Street Journal, hardly a bastion of liberal thinking, has reported on cases where consumers had to go in three times to get the mortgage documents to say what the broker said its terms would be. Three times means it wasn't an error. How may people sit to read the loan documents at closing? Most people aren't legally savvy and wouldn't know where to look for the key terms.

In addition, many people (and businesses), recognizing that mortgages are complicated, go to a mortgage broker to shop on their behalf. Many consumers are not sophisticated enough to realize that the broker may be more interested in lining his pockets than in getting them the best deal.

You're right, Archer, I left something out, sort of. The upselling "best possible loan" aspect of the piece I relegated to the phrases "smooth sales pitches" and sales agents "slicker than most," because I don't know what to make of it. It's not clear to me that upselling is categorically fraud--it depends on what was said. It's not ethical, and it is surely distasteful. But it's not fraud unless the sales agent is lying.

Is your view that the sales agent is required to give the customer the best deal (for the customer) available? I don't know many companies that do that. Moreover, the line in the article about how the Countrywide commission structure rewarded sales of the loans most lucrative to the company sounds like a pretty standard commission structure. (Whenever the waiter in a restaurant touts the "specials." I always wonder whether those are the plates with the highest margins or ingredients most ready to spoil.).

Now suppose the sales agent says the loan is the "best deal" they have, even if it's not. Is that fraud? If so, then lots of sales people in lots of different businesses may be headed for jail. At the same time, you identify the nub of the problem--mortgages are complicated and people can get misled. It's a very fine interaction we're trying to regulate. State attorneys general and federal regulators have used litigation and moral suasion to persuade lenders to curb or eliminate specific practices deemed especially sharp, but these after-the-fact approaches seem unsatisfying. Many folks are already in trouble by that point. Lenders' boundaries are never clear, and that vagueness may work its way into loan pricing.

I'm not defending Countrywide sales practices or even opining on whether fraud was ever committed. I'm just not sure Ms. Morgenstern's piece clarifies more than it obscures.

Morgenstern = clueless = hearty concurrence.

Is it true that the "upsells" were company policy?

My fiance and I are a victim of the "best Loan Possible" Countrywide made us assume our mortgage was a certain amount, when they slipped a HELOC loan on top it, if we knew that our mortgage payment was going to be 3100.00 a month for a 2 bed condo, we would of not bought. For a year we have been trying to get a straight answer from Countrywide on the seperate loan, they hit us with, NOONE ever returns our call. They say they are going to investigate and call us back within a week and NOONE ever calls us back. We are now tapped out with these 2 seperate mortgage payments forced to put our house up for sale (short sale). CW set us up to fail, here is a couple with perfect credit that thought our mortgage was going to be 1855.00 not 3100.00. I have talked to several attys thy want cash upfront to take this big company to court, which I have no more money in reserves, we have used all of our reserve money to stay ontop of our mortgage. I am asking anyone if they know a atty who is willing to take a look at our case and help us out, we would be ever so grateful.

Manhattan hedge fund manager and part-time Palm Beach resident James Nicholson is under house arrest today, accused of securities fraud and bank fraud by federal prosecutors and the FBI. Westgate Capital is the next company to try and pull a Madoff. Nicholson allegedly took investment monies, intended for investing in a hedge fund, and then he and his partners essentially took all of it. They even went so far as to put up a Westgate Capital branded investments division complete with virtual address and a phone number that only went to an answering service.