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Jul 1, 2008 11:23 pm US/Eastern
State Sues Countrywide, Claims Deceptive Practices
Florida Attorney General Filed Suit In Broward
FT. LAUDERDALE (CBS4) ―
Claiming that the company was more focused on making a profit than on making sure their customers received a home loan they could afford; Florida Attorney General Bill McCollum has filed a suit against Countrywide Financial Corp.
In their filing with the court, McCollum's office claims Countrywide approved expensive loans for borrowers who didn't qualify for them and then lied about interest rates and penalties.
"It is unthinkable that a company would try to take advantage of someone's dream of homeownership," said Attorney General McCollum. "Florida homeowners who are trying to protect their homes from foreclosures shouldn't have to worry about their mortgage brokers or lenders unfairly profiting at their expense."
According to the suit, Countrywide was more concerned with reselling the loans to a secondary market that they often ignored their underwriting standards and signed borrowers up for ''teaser'' rate mortgages while downplaying or, in some cases, not informing customers at all about penalties they would face if they made minimum payments or tried to refinance.
"Our legal services programs throughout the state have seen a large number of clients who are now in default on mortgages written by Countrywide. It appears to us Countrywide did no due diligence and accepted applications which were patently fraudulent and reflected no ability on the part of the borrowers to make the required payments," said Marc Taps with Legal Services of North Florida. "We cannot help but conclude that the most financially unsophisticated segment of the population was targeted by the brokers who knew Countrywide would write these mortgages."
Countrywide also reportedly offered brokers who got customers to sign loans with higher interest rates and prepayment penalties fee incentives because mortgage lender could then sell those loans for higher prices on the secondary market.
McCollum's office filed the suit under the Unfair and Deceptive Trade Practice Act; it seeks compensation for at least 100 homeowners who have complained to the attorney general's office.
On Tuesday, Bank of America Corp. completed its purchase of Countrywide making the Charlotte-based bank the nation's leading mortgage originator and servicer.
Homeowners who believe they were the victims of deceptive practices when they received a home loan from Countrywide can call the attorney general's fraud hot line at 1-866-966-7226.
Complaints can also be filed
online.
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