California joins Illinois in suing Countrywide
California Attorney General Jerry Brown echoed the sentiments of his Illinois counter-part, citing lending practices that encouraged risky borrowing behavior as the key reason for filing a civil suit against Countrywide today in California court. The lawsuit also names Angelo Mozilo and President Dave Sambol in the suit.
I imagine that this will go down very much like Ameriquest did at the beginning of the subprime boom. The states will have a hard time proving wrongdoing, but they’ll amass enough questionable evidence to suggest to Bank of America that they quickly resolve the matter to protect them from further investigations and law suits in their respective states.
Bank of America will settle with the states for the Countrywide misgivings by announcing some record-breaking dollar amount - the states will claim victory and various heads of Countrywide will be alternatively hung or pardoned on a case-by-case basis.
It will all look good in the papers and on mainstream TV and the pundits will eat it up; but in the end will anything really be fixed?
From the New York Times:
The civil lawsuits, which also name Countrywide’s chief executive, Angelo R. Mozilo, as a defendant, accuse the lender of engaging in unfair trade practices that encouraged homeowners to take out risky loans, regardless of whether they could repay them.
The lender, based in Calabasas, Calif., became the company most closely associated with the American housing boom, in which mortgages with low teaser rates were seemingly handed out to anyone who asked, as well as the real estate market’s subsequent collapse when mortgage rates rose and shaky borrowers lost their homes to foreclosure.
“Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” California’s attorney general, Jerry Brown, said in a statement.