Well, the guy got very unlucky to get singled out, I will grant you that.  Most mortgage frauds of this sort will probably never be prosecuted.  But I had a very different reaction to the article than you did.  To me, the article is very biased in favor of Engle, and I believe that the author missed several very relevant aspects of the case.  Consider:

-- Engle was not "the smallest of the small fry," as the author claimed.  Engle got $1 million in mortgages through inflated income applications and was apparently carrying nearly that much mortgage debt at one time.  That is a lot of money-- and he defaulted on most of that debt, apparently. 

-- Engle certainly wasn't representing himself as the smallest of the small fry at any rate.  He was representing to banks that he earned $400k per year.  If you truly are a small fry and you represent yourself as a big fry on a loan application, my opinion is that you can't go back and play the small fry card when you get in trouble.

--This was not a case where someone just fudged their income to get a little bigger house for their own residence, believing that they could make the payments.  Engle was an admitted speculator.  He bought the first property to flip, not to live in.  This alone is not a crime of course, but it differentiates Engle from those who got a liar loan on their personal residence. It is very doubtful that there were "millions of Americans" whose borrowing activities resembled Engle's, as the author implied.

-- The stated income of $400k, to which the guy admitted, is truly outrageous-- several times the guy's true annual income, apparently. 

--The author totally whiffed on the circumstances of the second loan. The author claims that the $32,500 stated monthly income on the 2nd property was "an obviously absurd amount, especially since the loan itself was for only $300,000" but it actually makes perfect sense.  Engle would have had to state a very high income on that loan, considering that he already had something in the range of $500k+ in mortgage debt on the other property.  Presumably, the lender's underwriters would have discovered that debt when they pulled his credit report.  (I certainly woul think they at least looked at a credit report on even the loosest loans, but maybe I am wrong, ha!)   He therefore would have had to state an income sufficient to make payments on close to a million in debt, not just $300k.

--This is a fraud for income scheme-- Engle was taking cash out of transactions, and admitted he was using equity he was drawing out of the loan proceeds to finance his lifestyle.  He took out $80k in cash from the 2nd transaction with the highly fraudulent $32.500/month stated income, according to the author.  According to prosecutors, he took out $140k in cash total from fraudulent transactions.

--Engle claimed that he did not ever see the $32,500/month stated income on the second loan application.  However it's pretty clear that he at least knew about it and assented to obtaining a loan using such an application, since he referred to the fact that his "my mortgage broker didn’t mind writing down, you know, that I was making four hundred thousand grand a year when he knew I wasn’t."  If the author took out his calculator he'd see that 32.5k x 12 is pretty darn close to 400k, but for some reason the author fails to make the connection. 

--It also makes sense, then, that the jury would acquit Engle on the providing false infromation charge, if it related to that application, despite the author's claim that "even the jurors seemed confused about how to think about Mr. Engle’s supposed crime."  It seems likely the jury had doubts that Engle actually created/signed the false statements.  But that would not at all change the fact that evidence showed that Engle knew that false statements were being submitted on his behalf, that the submitted loan application roughly matched Engle's understanding of the fraud, and that he was receiving fraudulent loans based on false information. 

-- The IRS agent's instincts were correct that Engle had hidden income that could not be explained by his tax returns.  It turns out that the income was the $140,000 in home equity he cashed out. 

-- While he may have "lived modestly," as the author claimed, in terms of his material possessions in the United States, his travel abroad would not have been cheap.  I've put up lots of fraud stories where one of the main expenses of the perpetrator was not cars or jewelry but  rather vacations. 

-- While the loan officer involved in the case got a lesser sentence, he pleaded guilty, and agreed to testify against Engle.  Engle rolled the dice, pleaded not guilty, and took his chances with a jury.  I do not know if Engle was offered a deal, but in my experience reporting these types of cases, defendants who go to trial and are convicted get much stiffer sentences than those who plead guilty.  Engle's lawyer surely advised him of this.  In this light, the fact that Engle got a stiffer sentence than his loan officer or others who have committed more serious mortgage fraud offenses in other cases is understandable. 

-- Which brings up the fact that Engle was convicted by a jury of his peers.  If the jury had decided that the government's case was bogus, they could have acquitted him but they chose not to.

-- How likeable or positive the guy is-- an aspect of the situation that the author focused on-- really has no bearing on whether the guy is guilty or not.

-- Whether Angelo Mozilo should have gone to jail also is not relevant toward whether Engle is guilty or not.

-- Speaking of Mozilo, he was likely not criminally prosecuted because prosecutors believed he was likely to be acquitted.  You'd have to assume that prosecutors looking to make a name for themselves would have been climbing all over each other for the chance to prosecute an unsympathetic character like Mozilo if they had a strong case.  At any rate, the author just wants us to assume that the fact that Mozilo is walking free is outrageous, but he neither alleges the specific crime for which there is a slam dunk case against Mozilo, nor does he allege any specific act of corruption that saved Mozilo from prosecution. 

In summary: the circumstances went beyond the typical liar loan in both the extent of the exaggeration of the financial credentials of Engle, and the amount of money involved.  The fact that Engle took $140k and cash out of the home in mortgage transactions and spent it on himself is an aggravating circumstance in the case.  Then, despite the fact that he was guilty of what prosecutors had charged him with, he pled not guilty to all charges, nearly guaranteeing him of a stiffer sentence if he was convicted.

I'm not  totally comfortable with how Engle was picked as a target.   There's a line to be drawn here, but I'm not sure where I would draw it.  On the one hand, finding people whose tax returns do not match their lifestyles is probably a good way to catch tax cheats.  On the other hand, this agent appears to have had an astounding amount of power in choosing his subjects to investigate.  This is probably the only aspect of the case where I thought the author had a legitimate point to make.

All this being said, it sounds like Engle is an interesting guy who made some serious mistakes, but who has many redeeming qualities also.  He has been sentenced to less than 2 years at a minimum security prison.  That is not a death sentence by any means.  If Engle is who the author says he is, he has a chance to come out of this episode in his life a better and wiser man than he went into it.