Subscribe to my Feed
« Elegy for an Ethics Giant | Home | Lerach got convicted - but he just doesn’t get it »
Subprime mortgage woes spark insurance fraud
By Lauren | February 11, 2008
ABC reported on “Good Morning, America” today that, in the wake of the subprime mortgage mess, some U.S. homeowners are actually setting fire to their own homes to avoid losing them in foreclosure. Apparently, these desperate people believe that their homeowners’ insurance will pay out on the fires, helping rescue them from their financial woes. Talk about a flaming disaster …
For the record folks, arson is a crime, and so is insurance fraud. Setting fire to your house to avoid foreclosure won’t gain you a dime (the insurance company will pay the mortgagee, not you) and it may land you in prison. Don’t do it.
That said, it’s more than a little appalling that people who took out subprime mortgages in good faith reliance on the professional financiers who “helped” them by arranging those mortgages are now under so much pressure that they’re resorting to arson to escape their financial problems. No doubt the people who marketed subprime mortgages thought they had found a clever way to make a few extra dollars by tapping into a fresh market of new homebuyers. However, a responsible financial professional should understand that lending money to people who can’t afford to pay it back is a very bad idea.
The cost of the subprime mortgage lenders’ short-term greed isn’t just red ink on lenders’ balance sheets – it’s very real and immediate misery for the overextended borrowers and their families. Professional finance experts should know better.
Topics: Business Ethics, corporate responsibility |