03/12/2012 02:18 pm ET Updated Mar 13, 2012

Paige Kinney, Former Countrywide Loan Officer, Sentenced To 15 Years In Prison For Mortgage Fraud

The federal government is bringing a little justice to the mortgage mess, even if there was a five year delay.

Paige Kinney of Phoenix, a former Countrywide loan officer, was sentenced to 15 years in federal prison on Wednesday for leading a mortgage fraud scheme about five years ago, for which she pled guilty, according to the FBI. She also was ordered to pay $22 million in remuneration.

Kinney and her accomplices made $8.75 million in "cash back" while inducing Countrywide and other lenders to issue $38.75 million in fraudulent mortgages, according to the FBI.

Between January 2005 and December 2007, Kinney and her collaborators applied for loans using "straw buyers," or homebuyers who didn't intend to live in the homes or make their loan payments, according to the FBI. They made these homebuyers appear more qualified than they really were, by changing their bank statements and other documents, so that they could get loans that exceeded the homes' sale prices. The difference between the loan amount and the sale price was "cash back."

Countrywide, Kinney's former employer, became notorious in the aftermath of the financial crisis for its questionable lending practices. The company aggressively loaned to subprime borrowers during the housing boom, becoming the U.S.'s largest mortgage lender by writing progressively riskier loans, holding 15.7 percent of all mortgages in September 2006, according to Reuters.

In addition, Bank of America, which bought Countrywide for $4 billion in 2008, settled for $335 million with the U.S. Justice Department on allegations that Countrywide had discriminated against qualified Hispanic and African-American borrowers.

In 2010, Countrywide co-founder Angelo Mozilo paid $67.5 million in a settlement to avoid a trial with the Securities and Exchange Commission alleging that he profited while misleading investors about the riskiness of Countrywide's mortgages. He admitted no wrongdoing.

Kinney's arrangement functioned like a Ponzi scheme; she used the "cash back" to extend the scheme by making mortgage payments on the loans and paying the straw buyers. In addition, Kinney and her collaborators spent the money on personal items like luxury cars, jewelry, and houses in Phoenix and San Diego, according to the FBI.

"Mortgage fraud has had a tremendous adverse impact on both the economy and the citizens of Arizona," said James Turgal, special agent in charge of the FBI's Phoenix office, in a statement. "It will continue to remain a top criminal priority of the FBI."

Bank of America declined to comment on the case to The Wall Street Journal.