It cannot just be assumed that most people who during the housing boom bought homes with adjustable-rate mortgages, or mortgages with prepayment penalties, or mortgages that required a low or even no down payment, were fools or victims of fraud.
The SEC says Mozilo, former chief operating officer David Sambol and ex-chief financial officer Eric Sieracki deliberately misled investors about the nature of Countrywide's business, including the degree to which it had deviated from underwriting mostly prime loans toward riskier subprime and option adjustable-rate mortgages, both of which began to crumble when the housing bubble burst in 2007.