 According the Associated Press, the California attorney general's office has filed a lawsuit against Countrywide Financial Corporation today, citing that the corporation's misleading advertisements fooled homebuyers into obtaining risky loans, without fully understanding the loan terms.
California's filing comes on the same day Illinois files suit against Countrywide Financial for "unfair and deceptive" business practices. The complaint was filed with California's Superior Court by California Attorney General Jerry Brown. In the suit, the state claims: "Defendants viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers' long-term ability to afford them and to sustain homeownership." The lawsuit also alleges that the company misled borrowers into adjustable rate mortgages, home equity loans, and pay-option loans. During the housing boom, these types of loans were prevalent among borrowers. Adjustable rate mortgages offer a low introductory interest rate for a short period of time, followed by a dramatic increase in payments. Countrywide Financial is responsible for a large portion of these loans going into delinquency or default and pushing the housing industry into a crisis. Countrywide Financial Corp. is the largest mortgage lender in the United States. Besides California and Illinois's lawsuits, Countrywide is also facing numerous other lawsuits and intense federal scrutiny. Countrywide shareholders are also expected to vote in favor of a takeover by Bank of America Corp. within the next few days. (Posted by K.Skowronski)
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