What Is Countrywide Unethical

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Countrywide Financial is a large expanded financial service provider. They operate in five business divisions, those being mortgage, banking, capital markets, insurance, and global operations. Countrywide was the leading market share among the United States mortgage originators before unethical activities caused the collapse of the firm. Problems in Countrywide’s loan practices were apparent. After the financial crisis of 2008 Countrywide was found to be a noteworthy contributor to the subprime mortgage debacle. Bank of America was in a position to acquire Countrywide, but they would have to make some enormous scale ethical changes to the way they functioned.
Countrywide wanted to be the major real estate mortgage originator in the United …show more content…

First, they were using predatory lending practices. Predatory loans were any loans that a debtor would have rejected with a full understanding of the terms of the loan and the available changes. Establishing loans with this practice usually were successful due to unethical tactics like dishonesty, manipulation, and deception. This would persuade debtors to agree to terms that were unethical or dishonest. Next, Countrywide was masking information from the shareholders by supporting prime quality mortgages, but they were actually using an increasingly reckless lending practice with high risk. The risk associated with each loan increased as senior executives knowingly allowed risky mortgages to be …show more content…

Bank of America would need to make some extreme changes at Countrywide if they wanted to make a profit with the acquisition. Bank of America should separate itself from the previous unethical affiliates and ensure the clienteles and the government that they will help with investigations in any way possible. Bank of America needs to establish a accurate risk management policy and other programs that will help ease the impact of long term loans and help debtors from losing their homes. An ethical policy needs to be recognized that includes the one strike rule for managers that carry out unethical practices like predatory loans or false reporting. Debtors will need to provide credentials of income and employment to prove that they can afford the mortgage agreement they are trying to establish. A debtor risk evaluation program should be recognized that will show lenders when a loan is too risky to approve. Adjustable rate mortgages should be removed as they have a history of being abused or leaving homeowners with mortgages they can no longer afford. Interest rates need to be established at the time of the mortgage agreement, and the debtor made fully aware of how the interest rate is established and the circumstances that would need to occur in order for any adjustments to be made. Countrywide made some enormous mistakes related to the ethics of their everyday

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