Foreclosure Buzz

Update: August 13, 2008: West Virginia sued Countrywide Financial Corp accusing the mortgage lender, now owned by Bank of America, of making risky and costly loans to consumers who could not afford them. See article.

Update: August 7, 2008: Connecticut, the fourth state to sue Countrywide [now Bank of America], alleges that it “broke state banking and consumer laws by making loans home buyers couldn’t afford and by other ‘oppressive, unethical, immoral and unscrupulous’ practices.” See article.

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Florida sued Countrywide (June 30, 2008) for abusive and deceptive lending practices. (New York Times article.)  Last Wednesday, officials in Illinois and in Countrywide’s home state California also filed suits against the lender.  Washington state filed an administrative complaint, and Iowa is considering taking action. See WSJ article.  For copies of the lawsuits, goto this post.  Is Texas next?

Attorney General Greg Abbott’s office has been going after so-called mortgage rescue companies. Public Citizen would like for that office to next go after the subprime mortgage lenders.Public Citizen Texas President Tom Smith says California and Illinois both filed suit against Countrywide Financial last week claiming it used deceptive trade practices to get people into homes they couldn’t afford. He says Texas should join that suit. “While other states take action against shady subprime mortgage lenders, Texas Attorney General Greg Abbott does nothing. Texas has a deceptive practices act, yet the statute has not been enforced against home-lending giants like Countrywide. The actions in Illinois and California show that Abbott has the authority to do much more than sit by and watch as thousands of Texans lose their homes each month.”Attorney General’s spokesman Tom Kelley says the office can’t comment on possible ongoing investigations nor can it talk about contemplated legal action.

The Forney Post, June 30, 2008 (article)

Mozilo and Countrywide are officially gone as the Bank of America purchase was approved and completed. See article.  Reports are that Mozilo teared up giving his speech to shareholders.  See blog posting.  Bank of America, which initially invested $2 billion in Countrywide last August, agreed in January to buy it for an additional $4 billion in stock. The deal’s value has since tumbled to $2.5 billion as Bank of America’s share price has declined, partly out of concern about the wisdom of the acquisition. Early last year, Countrywide was worth more than $25 billion on paper.  Ken Lewis, Bank of America’s chief executive, made clear from the start that Mozilo would depart after the deal closed, with Bank of America’s more conservative management and lending styles to prevail.  Taken from this LA Times article.