A Question of Ethics—Predatory Lending. Peter Sutton’s home was subject to two mortgages with payments of more than $1,400 per month, but his only source of income was $1,080 monthly from Social Security. Hoping to reduce the size of the payments, Sutton contacted Apex Mortgage Services. According to Sutton, the broker led him to believe that he could refinance with Countrywide Home Loans, Inc., for payments of $428 per month. In the end, the broker arranged an adjustable-rate loan from Countrywide with initial payments of about $1,000 per month subject to future increases. The loan included a prepayment penalty.

Sutton paid the broker a fee and signed the agreement, but later claimed that he did not understand the terms. The payments proved too much for Sutton to afford, and he defaulted on the loan. Sutton sued the broker and lender claiming violations of federal law. [Sutton v. Countrywide Home Loans, Inc., ___ F.3d ___ (11th Cir. 2009)] (See page 578.)
1. Who is ethically responsible for Sutton’s predicament? To what extent did Sutton have a duty to read and understand what he signed? Discuss.
2. Sutton argued that he should not have to pay the broker’s fee because the broker did not provide any services that were of value. Do you agree? Why or why not?
3. Did Countrywide, the lender, have any ethical obligation to monitor the activities of the broker? Would the result have been different if Countrywide had intervened before the documents were signed? Explain.