Those Darn Lenders!

From an MSNBC article:

A high-ranking Treasury Department official on Wednesday chastised mortgage lenders for too-often failing to verify the income of borrowers with blemished credit histories, blaming the practice for rising defaults and foreclosures.

Comptroller of the Currency John C. Dugan said federal banking regulators need to give the industry guidance for improvement in this area, though he did not offer a specific remedy.

So, in other words, people misrepresent their incomes to get bigger mortgages, then default, and it is the lender's fault that these "unfortunate" people lose their homes? What about the other people who are involved with the mortgage companies that are essentially victims of fraud (granted, the companies perhaps didn't do enough to protect themselves - but that doesn't suddenly mean that they are the offending party and the borrower the victim)? Should the Treasury recommend tougher criminal penalties for people who lie on their applications, default, and thereby hurt the company, its employees and shareholders?