California Attorney General Edmund G. Brown Jr. has sued Countrywide Financial, its chief executive, Angelo Mozilo, and its president, David Sambol, for allegedly engaging in deceptive advertising and unfair competition by pushing homeowners into mass-produced, risky loans for the sole purpose of reselling the mortgages on the secondary market.
‘Countrywide exploited the American Dream of homeownership and then sold its mortgages for huge profits on the secondary market,’ Brown states. ‘The company sold ever-increasing numbers of complex and risky home loans, as quickly as possible. Countrywide was, in essence, a mass-production loan factory, producing ever-increasing streams of debt without regard for borrowers. Today's lawsuit seeks relief for Californians who were ripped off by Countrywide's deceptive scheme."
Brown alleges that Countrywide Financial used deceptive tactics to push homeowners into complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors. According to the lawsuit, the company marketed complex and difficult-to-understand loans with very low initial or "teaser" interest rates or payments.
Despite receiving numerous complaints from borrowers claiming that they did not understand their loan terms, Countrywide ignored loan officers' deceptive practices and loose underwriting standards, according to Brown's office. Countrywide also pushed its borrowers to serially refinance, repeatedly urging borrowers to obtain home loans to pay off their current debt.
The case is People v. Countrywide, Los Angeles Superior Court case number LC081846.
Source: Office Of California Attorney General Edmund G. Brown Jr.