Organizational Issues
Ethics 316
August 29, 2012

Organizational Issues

In the early part of 2000, the housing market was exploding. Real estate became a sure thing investment. Investors could flip a house for a profit, almost as fast as they could purchase one. Equity was plentiful and home buyers were taking advantage of it. Mortgage companies took advantage of the real estate boom in efforts to make as much money as possible. It is understandable to want to make a profit, but mortgage companies like Countrywide took it too far. Countrywide Financial was accused (and later charged) of luring prospective buyers into purchasing homes with high interest rate and hidden fees. A family would shop for a home and when they found one they loved, Countrywide would work a deal that the prospective home owner would think was fair. The naivety of the buyer caused him/her to believe promises like, the payment might be a little high, but if you make payments on time you can refinance in a few years for a lower payment or pull money out of the equity. Countrywide’s goal was only to make a profit; they cared nothing about the dilemma that was starting to unfold. The company was unethical by stretching the truth to their customers. This was a clear case of egoism on the part of Countrywide. The company felt that it had the right to make these loans if people were naïve enough to sign the contracts. The company looked out for its own interest without any concern for the customer. Eventually pressure from the U.S. government and the many customers who were coerced into take taking the home loans, caused Countrywide to try to figure out ways to correct the problem. As time went on, Countrywide was forced to consider bankruptcy. The unethical actions had come back to haunt them and was causing one of the largest mortgage companies in the nation to consider bankruptcy. According to (Salmon, 2008), “A failure of Countrywide would have posed a major risk to the U.S. economy, since the lender services about one of every six loans in the country.” Luckily for Countrywide and the U.S. economy, Bank of America stepped in and purchased the company. Short term, Countrywide made millions and millions of dollars while practicing unethical behaviors. The companies as well as real estate agents were rolling in the dough. Everyone was making money except for the home owner. With the downturn in the economy, businesses began to downsize and these homeowners were being laid off. The property value began to drop, but the loan amounts and interest rates were still high. The equity that home owners had enjoyed was quickly dissipating and many were not able to make mortgage payments. Since so many people were dealing with this problem, the government had no choice but to step in and create ways to help the customers figure a way out. The