The answer is that this is VERY widespread. Many builders opened in-house lending co’s and engaged in the same practices. Even if they didn’t outright own their own mortgage co, they set up affiliated business arrangements with a lender, e.g. Countrywide which was a major builder preferred lender and is now being accused of appraisal fraud in conjuntion with KB Home. Countrywide has also settled w/some state agencies re: predatory/fraudulent lending. Countrywide is now owned by B of A as you probably know.

Making these toxic loans, even if they had to commit crimes to do it, was lucrative. The FBI found and reported several yrs ago that 80% of mortgage fraud was done by industry insiders, and warned it could seriously damage the economy. Had that kind of news made it to mainstream media as often as Britny Spears activities, maybe the public would’ve been wise to these scams instead of duped by them. The industry committed crimes, and if the company has enough money or convinces the govt it can repay it, will settle and escape prosecution. Smaller co’s are seeing their CEO’s tried and jailed for the same things. These larger co’s CEO’s should be joining them there, not buying their way out of it. BTW, several big builders settled for millions w/HUD a couple yrs ago for lending law violations. Obviously these fines and settlements don’t have any effect. They just pass the cost on to the consumer!