Fifth State Sues Countrywide

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MORTGAGE EXPERT
8 · 25 · 08

An investigation by Indiana’s attorney general has led to a lawsuit against Countrywide. Indiana, which alleges mortgage fraud and customer deceit, is the fifth state to sue Countrywide since June.

Attorney General Steve Carter announced that a lawsuit was filed by the state in Steuben County Court against Countrywide Home Loans Inc. and parent Countrywide Financial Corp.

Carter claims the Bank of America Corp. subsidiary engaged in deceptive and misleading practices that led to borrowers obtaining potentially risky and costly loans. Thousands of borrowers may have been harmed by Countrywide’s practices.

Indiana alleges employees and mortgage brokers were paid financial incentives to sell risky loans. Borrowers were allegedly misled about the terms of their adjustable-rate mortgages and prepayment penalties.

Countrywide is also accused of inflating or fabricating borrowers’ incomes.

“In one case, a person’s income was stated as $14,000 per month when in actuality the person’s income was approximately $3,000 per month.” the announcement said.

Indiana seeks to void prepayment penalties as well as void any portion of the loans that resulted from deceptive acts. In addition, the state seeks civil penalties of up to $15,500 per violation — which it claims are allowed under the Home Loan Practices Act, Indiana Code 24-9-8, and the Indiana Deceptive Consumer Sales Act, Indiana Code 24-5-0.5.

“Before more people face the prospect of foreclosure or actually lose their homes, we need to determine whether individual loans may have been originated through methods that violated Indiana law,” Carter said in the statement.

Other states to sue Countrywide over similar allegations include West Virginia, which announced earlier this month that it filed a lawsuit; Connecticut, with its attorney general announcing on Aug. 6 that it filed a lawsuit alleging overcharging, mortgage fraud and poor underwriting; California, which originally filed litigation in June then expanded that lawsuit in July; and Illinois, which through its Attorney General Lisa Madigan filed a lawsuit in June,

In addition, the City of San Diego sued Countrywide last month to try delay foreclosures on owner-occupied properties located in San Diego that secure ARMs with teaser rates made to subprime borrowers. Meanwhile, Washington’s Gov. Chris Gregoire announced in June that the state planned to fine Countrywide $1 million for discriminatory lending and require it to pay more than $5 million in unpaid assessments. She also said the state is seeking to revoke the lender’s mortgage license because of alleged illegal activity.

Related:
Another State Sues Countrywide
West Virginia has joined a host of other states suing Countrywide Financial Corp.

Lawsuits Pile Up Against Countrywide
Countrywide Financial Corp. is facing its seventh lawsuit in three months. The latest action alleges overcharging, mortgage fraud and poor underwriting.

City Sues Countywide to Stop Foreclosures
The city of San Diego is suing Countrywide Financial Corp. in an effort to slow foreclosures.

California Expands Lawsuit Against Countrywide
The state of California claims it has uncovered “shocking new details” about how Countrywide Financial Corp. disregarded prudent underwriting and deceived borrowers.

2 States Sue Countrywide
As Countrywide Financial Corp. shareholders voted on whether to approved Bank of America Corp.’s proposed acquisition of the company, attorneys general in California and Illinois sued the lender. Meanwhile, Washington’s governor also announced actions against the lender.

State of Indiana v. Countrywide Financial Corporation, a Delaware corporation, Countrywide Home Loans Inc., a New York corporation aka America’s Wholesale Lender, and John Does 1-20
493710-1 (Steuben Circuit Court)

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Mortgage Daily Staff

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