August 7, 2008
Connecticut Sues Countrywide; Calls Lender ‘Unscrupulous’
By Eric Gershon, The Hartford Courant, Conn.
Aug. 7--Connecticut became the fourth state to sue Countrywide Financial Corp. on Wednesday, alleging that the giant mortgage lender broke state banking and consumer laws by making loans home buyers couldn't afford and by other "oppressive, unethical, immoral and unscrupulous" practices.
"Countrywide directly and disgracefully exploited these homeowners," Blumenthal said.
Now owned by Bank of America, which is not named as a defendant in the suit, Countrywide referred requests for comment to the bank, which declined comment.
"We will respond to the AG in due course," Bank of America spokeswoman Shirley Norton wrote in an e-mail.
Once the nation's biggest mortgage lender, Countrywide became a poster child for the subprime mortgage crisis that has led to mass foreclosures and been a major drag on the U.S. economy.
Several U.S. senators, including Christopher J. Dodd, D-Conn., have been criticized for accepting loans through a Countrywide VIP program known as "Friends of Angelo."
Angelo Mozilo founded Countrywide in 1969 and was its CEO until July 1. Dodd has said he was not aware he was receiving special treatment.
Blumenthal offered little detail about Countrywide's operations in Connecticut, but he described the company to reporters as "one of the biggest mortgage companies operating" here.
In some cases, Countrywide agents "improperly inflated consumers' incomes in order to qualify them for loans they otherwise would not have received," according to the suit. In others, consumers were pressured into "inappropriate" adjustable rate mortgages, the suit says.
The attorney general said his office has "an ongoing investigation" into other mortgage lenders and brokers but did not say whether any other suits were imminent. The Countrywide suit does not name specific consumers who suffered harm from Countrywide's practices.
The suit seeks restitution, loan modifications for Connecticut consumers affected by the alleged violations, the return of "ill-gotten proceeds," financial penalties of up to $100,000 for each violation of state banking laws and other penalties.
Contact Eric Gershon at [email protected]
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