Countrywide get's called out for setting homeowners up

By CARYN ROUSSEAU, Associated Press Writer
CHICAGO - The nation's biggest mortgage lender engaged in "unfair and deceptive" practices to get homeowners to apply for risky mortgages far beyond their means, according to a civil lawsuit Illinois' attorney general planned to file Wednesday.
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The lawsuit against Countrywide Financial Corp. — planned for the same day shareholders were scheduled to vote on the company's takeover by Bank of America Corp. — stems from information from documents subpoenaed by the state beginning last fall, as the number of foreclosures nationwide began to skyrocket.

"Countrywide's conduct has contributed to the high number of foreclosures in Illinois and caused significant harm to the public, the market, and scores of Illinois borrowers and homeowners," according to a draft of the lawsuit provided by Attorney General Lisa Madigan's office Tuesday evening.

A spokeswoman for the Calabasas, Calif.-based company declined to comment on the litigation.

Madigan spokeswoman Robyn Ziegler said the lawsuit would be filed Wednesday in Cook County Circuit Court. In the complaint, Madigan says that Countrywide offered unfair loans with risky features, used misleading sales techniques and encouraged employees and brokers through incentives to sell more high-risk loans.

"Unfair and deceptive advertising, marketing and sales practices were utilized to push mortgages, while hiding the real costs and risks to borrowers, including enticing borrowers with low teaser rates, low monthly payments and 'no closing cost' loans that failed to make clear and conspicuous," according to the lawsuit, which also names Countrywide Chairman and Chief Executive Angelo Mozilo as a defendant.

Among other things, Madigan wants Countrywide to pay restitution to all affected consumers who lost their homes or loans. She also asks for 90 days to review any loans that are in or near foreclosure to see if borrowers can pursue affordable options.

Countrywide, like many in the mortgage industry, has suffered under the weight of the subprime fallout as thousands of customers default on home loans.

Defaults and subsequent foreclosures have been most pronounced on adjustable-rate mortgages made to borrowers with past credit problems. The subprime loans typically require a lower monthly payment in the first two or three years before resetting to higher interest rates and much larger payments.

As the nation's largest mortgage lender and servicer, Countrywide has been under scrutiny by federal and state authorities. It also faces numerous other lawsuits related to its lending practices.

Countrywide agreed in January to sell itself to Bank of America Corp. for around $4 billion in stock. The deal is now valued at around $2.8 billion, reflecting a decline in Bank of America's stock price over the last six months.

The acquisition received clearance from the Federal Reserve earlier this month, and Countrywide shareholders are scheduled to vote on it Wednesday morning during a meeting at the lender's headquarters.

Assuming shareholders give their approval, Charlotte, N.C.-based Bank of America has said it could close the deal as early as July 1.

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AP Business Writer Alex Veiga in Los Angeles contributed to this report.

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The Woman Who Thought She Could

Of course Hillary had a better chance against McCain than Obama. However, the Democratic party seems to have given up on the presidency. Obama's only selling point is that he's an underdog. American hasn't officially had a "black" president, so that is what he has to offer.

As a politician, his record is one of intense mediocrity. His only marketable quality is the color of his skin. This is unfortunate for the democrats. In a presidential election you hope to have candidates that are appealing to both parties. There is no sense in finding the candidate that your party likes if he's not going to get elected.

It's one thing to win a party nomination, but quite another to win a general election. In this case, Hillary was the candidate with the highest potential to win general, but was overshadowed by the parties internal enamor with Obama.

Do the Democrats simply not want the presidency during these troubles times? Are they attempting to show at the general election by placing a solid second place runner in a two man race? What would be the advantage other than avoiding responsibility during troubled times? Could it be another chip in the game to say we've been ignored by racists when the truth is they put up a candidate with nothing more than race to offer?

Of course many Democrats will say that racism or corruption prevented them from winning this election. The truth however, is that the Democrats purposely created the scenario for failure. Sadly, the country and the Republicans will receive the blame.

When people complain about racism or corruption, just remind them that they had a good chance before they decided to lose with Obama. It's not likely that they didn't understand that a majority of Democrats chasing eye candy is not the target audience for a general election.