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Countrywide, the poster-child for housing bubble lending greed is facing an inquiry by the FTC regarding it’s lending practices. The probe, requested by New York Senator Schumer, asks the FTC to review the lending practices of the mortgage giant. Renewed interest in the business practices are a result of numerous lawsuits against delinquent mortgage-holders being withdrawn for inaccurate or potentially fraudulent evidence against the defendants.
Countrywide admitted in court that it had re-created late payment notices to mortgage-holders who had never actually received the original notice.
None of this should come as a surprise to those following Countrywide. The company has a long history of shady business practices from allegations of routing prime borrowers to subprime products, inappropriate sales incentives to push borrowers to higher cost loans, inaccurate accounting of current mortgage balances and predatory lending by it’s retail team and wholesale channels.
From Market Watch on the Countrywide FTC investigation:
Schumer made the request in a letter to FTC Chairman William Kovacic, citing “cases in multiple states in which Countrywide attorneys were reportedly forced to withdraw motions that incorrectly contended that debtors were delinquent on payments.”In addition, a federal judge in Los Angeles has ruled that besieged mortgage lender Countrywide Financial Corp. must face a shareholder lawsuit against 14 current and former top executives and board members that alleges the company engaged in risky lending practices that led to its collapse this fall.“It defies reason, given the entirety of the allegations, that these committee members could be blind to widespread deviations from the underwriting policies and standards being committed by employees at all levels,” wrote Judge Mariana Pfaelzer of Federal District Court in Los Angeles.
Schumer raised concerns Wednesday about the lender’s admission in court that it had sometimes “re-created” delinquency or foreclosure letters that were never actually sent to delinquent borrowers.Countrywide has faced multiple lawsuits nationwide alleging it fabricated or altered documents, intimidated borrowers and assessed illegal or exorbitant fees in foreclosure or bankruptcy proceedings.
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