Banking Law

Another AG Sues Countrywide

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The attorney general of Florida has sued Countrywide Financial Corp. over its mortgage lending practices, contending that they were deceptive and unfair and not properly disclosed in securities filings.

“Underscoring the aggressiveness of its lending practices—aimed at maximizing the company’s profits regardless of credit risk—the complaint said Countrywide’s own underwriters were ‘threatened with termination for attempting to verify a borrower’s ability to pay, or otherwise impeding loan approval,’ ” reports Reuters.

It is the third such action against Countrywide in less than a week: As discussed in an earlier post, similar cases were filed by the attorneys general of California and Illinois on June 25.

Specifically, Florida Attorney General Bill McCollum says in a press release, Countrywide “eased or ignored its own underwriting standards and encouraged borrowers to enter into ‘teaser’ rates while concealing or misrepresenting that much larger payments would become due,” leading to a foreclosure rate than exceeds 25 percent on the company’s riskiest subprime mortgages.

In an e-mailed comment, Countrywide declines to discuss with Bloomberg the details of the action, but says it is “fully cooperating” with McCollum’s office.

“Our mission remains to assist our customers,” writes Countrywide. “We are particularly focused on working with our customers who are having difficulty making their mortgage payments, or who foresee difficulty with future rate resets.”

A copy of the complaint (PDF), which seeks damages, civil penalties and attorney fees, among other relief, is provided via McCollum’s office.

Related coverage:

Triangle Business Journal: “Bank of America wraps up Countrywide buy”

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