As Countrywide’s shareholder’s approved Bank of America’s takeover offer, California and Illinois filed suit against the mortgage lender for “luring borrowers into risky loans they couldn’t afford.”
Countrywide and Chief Executive Officer Angelo Mozilo were named in the suits, filed today, claiming the lender’s tactics led thousands of borrowers to lose their homes when they couldn’t make their payments. Countrywide used deceptive practices, including low “teaser” rates, to entice borrowers into adjustable-rate loans without adequately informing them that the payments would balloon in later months, according to the suits.
The suit seeks “restitution for borrowers, civil penalties of as much as $2,500 per violation and a court order halting the practices.” Mortgage surcharge anyone?
UPDATE: From a plugged-in litigator: “I litigate cases under this statute all the time. It will be resolved with a promise to stop doing all these things and a payment to the state of several million dollars. The alleged “victims” (those who took out CW loans) won’t get a dime and there will be no “mortgage surcharge.” Basically, B of A shareholders will take an insignificant hit and that will be the end of it.”
∙ Countrywide Sued by California, Illinois, Over Mortgage Loans [Bloomberg]