Friday, June 27, 2008

The Drama of Countrywide Financial Corporation Opens in Los Angeles and Chicago

The drama of Countywide Financial Corporation is now playing in the Superior Court of the State of California in and for the County of Los Angeles and the Circuit Court of Cook County, Illinois.

The California Attorney General's website summarizes the allegations against Countywide as follows:

• Encouraging borrowers to refinance or obtain financing with complicated mortgage instruments like hybrid adjustable rate mortgages or payment option adjustable mortgages

• Marketing complex loan products by emphasizing a very low “teaser” rate while misrepresenting the steep monthly payments, increased interest rates and risk of negative amortization

• Dramatically easing underwriting standards to qualify more people for loans

• Using low or no-documentation loans which allowed no verification of stated income

• Hiding total monthly payment obligations by selling homeowners a second mortgage in the form of a home equity line of credit

• Making borrowers sign a large stack of documents without provider time to read the paperwork

• Misrepresenting or hiding the fact that loans had prepayment penalties
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