| Article Index |
|---|
| Homeowners with Countrywide loans eligible for Loan Modification |
| Page 2 |
| All Pages |
ON June 25, 2008, Califor-nia Attorney General Ed-mund G. Brown Jr. sued Countrywide Financial, its Chief Executive Officer Angelo Mozilo, and President David Sambol, for engaging in deceptive advertis-ing and unfair competition by pushing homeowners into mass-produced risky loans for the sole purpose of reselling the mort-gages on the secondary market. The lawsuit was filed in order to "seek relief for Californians who were ripped off by Countrywide’s deceptive scheme," according to the Attorney General.
Countrywide was found to have used deceptive tactics to push homeowners into compli-cated, risky and expensive loans so that the company could later in time sell as many loans as pos-sible to third-party investors. The company loans were promised very low initial or "teaser" inter-est rates or payments. However, average homeowners later find out that these loans are very complex and difficult to under-stand. Countrywide employees, ranging from loan officers and underwriters to branch manag-ers were pressured to sign up as many lenders as they could, and in the process misrepresented or obfuscated the fact that certain types of loans for the borrowers would naturally lead to dramatic increases in monthly payments. Employees who did not meet quotas were terminated.
The company’s deceptive mar-keting practices included but were not limited to the follow-ing:
1) Marketing complex loan products by emphasizing a very low "teaser" rate while misrep-resenting the steep monthly pay-ments, increased interest rates and risk of negative amortiza-tion;
2) Dramatically easing under-writing standards to qualify more people for loans;
3) Using low or no-documen-tation loans which allowed no verification of stated income;
4) Hiding total monthly pay-ment obligations by selling ho-meowners a second mortgage in the form of a home equity line of credit;
5) Making borrowers sign a large stack of documents without providing time to read the paper-work; and
6) Misrepresenting or hiding the fact that loans had prepay-ment penalties.
As a result of Countrywide’s deceptive sales practices, a large number of loans ended in default and foreclosure. Borrowers who filed complaints to Countrywide claiming that they didn’t under-stand their loan term were only ignored by loan officers.
| Comments |
|
3.26 Copyright (C) 2008 Compojoom.com / Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."
| < Prev | Next > |
|---|
