Light sentence in mortgage frauds sends wrong message on a serious issue

Anyone who has been watching Wall Street's gyrations this summer is familiar with the effect of subprime mortgages. These are the risky loans extended to people with poor credit -- supposedly so they can share in the American dream of home ownership. They've led to a national upsurge in foreclosures and an erosion of confidence in the economy.

But this isn't just a numbers story about dollars, interest rates and the Dow Jones Average. It's about people like Angie and Eduardo Sosa. And those -- like Christopher Gallagher, Patrick Balf and Donald Stone -- who take advantage of hundreds and thousands like them.

In 1999, the Sosas took out a mortgage with Mr. Gallagher's Allentown mortgage brokerage. Mr. Balf referred buyers to the firm and Mr. Stone worked for Mr. Gallagher. They targeted poor people, often Hispanics, inflating the prices on rundown homes and getting them to sign predatory loans with fraudulent information.

The Sosas purchased a home on N. Sixth Street for $48,750, which just two months earlier had been sold for $26,000. At the time, the Sosas had an annual income of about $20,000. They didn't understand the details of the mortgage and its 11.99 percent interest rate and large ''balloon'' payment. Soon, their mortgage payments hit $700 a month. They fell behind on their taxes and twice had liens placed on their home.

But the Sosas are among the lucky ones. ''It took a lot of hard, stressful times,'' says Mrs. Sosa, but the family paid their bills and eventually refinanced their mortgage.

In Allentown, there were hundreds of others who weren't as fortunate. While purchasers have a responsibility to inform themselves of the details of mortgages, the insidious reality with this subprime scandal is that it preys on people made vulnerable by their lack of understanding and resources. Messers. Gallagher, Balf and Stone preyed on these people. The greater responsibility rests with them.

Messers. Balf and Stone were sentenced last year for their part in the scam. Mr. Balf got five years in prison and must pay $2 million in restitution. Mr. Stone got six months and must pay $820,000 in restitution.

Last week, U.S. District Judge James Knoll Gardner sentenced Mr. Gallagher to 18 months in prison, three years supervised release and ordered $145,000 in restitution on three counts of wire fraud and two counts of failure to file income taxes. But the judge allowed this so-called ''struggling musician'' three months to perform with a rock band and release a CD before he must surrender. This was okay with federal prosecutor Seth Weber.

Outrageous. Maybe this was Mr. Gallagher's first offense, but he victimized hundreds of people. He could have been sentenced to 62 years. This white-collar crime sentence, and letting Mr. Gallagher play in his band is an insult to any sense of justice (Depicted from www.mcall.com).