BluefoxToday blog : Countrywide faces more challenges

Countrywide faces more challenges

The one-time king of the hill of mortgage lending is now being continuously hounded by lawsuits from just about all corners of the spectrum. Company shareholders, employees and borrowers have already filed a pile of legal action against it and to make matters worse several states just now decided to join the increasingly far-reaching tussle.

California, Illinois and Washington each filed their own particular lawsuits, claiming for instance that Countrywide employed "misleading marketing practices", maneuvered borrowers into "risky and costly mortgage loans" without having the ability to pay them back and that it used "unfair and deceptive practices" in marketing loan products. That is pretty heavy material and if it's true, then the lender should be held liable.

If at least some of this can be proved in the courts, Countrywide could be directed to pay restitution to its borrowers. That's exactly what the states are seeking with their legal action. The restitution could be the return of all the profits the lender made off a chunk of loans and perhaps even go as far as having to hand back foreclosed homes. Wouldn't that be something? In the year 2008 Joe Homeowner was foreclosed out of his house and in 2010 Joe gets a letter in the mail saying that he just got his old house back. That surely would make Joe scratch his head. Anyway, affected people in California, Illinois and Washington should be following closely how these lawsuits play out in the coming months, although it more likely will take years before they all are sorted out.

Another thing is that Bank of America is about to close on the purchase of Countrywide, an action that now looks a little questionable. When it first made the offer, B of A probably wasn't aware of all the potential problems that would come with the deal. Now it's too late to back out, so it just has to put aside a truckload of money to cover possible restitution and other costs associated with these lawsuits. Some experts have figured that Countrywide-related write-downs could go as high as $9 billion. A tidy sum.



Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 20 commentsEsko Kiuru • June 27 2008 12:19AM


I believed from day 1 that the 2 billion infusion last year by BoA was an option to purchase, Esko. Good post. Hope your having a fine week.

Posted by David Saks over 10 years ago

B of A must have buyers remorse on steroids at this point.  I hope it works out for them.

Posted by Robert Machado, CPM MPM - Property Manager and Property Management (HomePointe Property Management, CRMC) over 10 years ago

Classic political timing, with the CA attorney generals office filing suit the very same day the Countrywide shareholders meet to vote on the Bank of America buyout.

The Hidden agenda of ALL those involved is and should be questioned and exposed. Shall we call this negotiation  or manipulation ? Of course if wrongdoings can be found it is the obligation of the A'G's office to investigate, however one has to question the timing.

Chris Giddings

Posted by Chris Giddings (Realty One Group) over 10 years ago

Anyone have copies of these "misleading marketing practices"?  or other lenders' marketing materials for the same period of time?


Posted by Dora & Vincent Kwok, CNE - Chandler, Arizona Real Estate (HomeSmart Real Estate) over 10 years ago

It's deja vu all over again.  I wish I weren't old enough to remember the S&L crisis, but I am and I do.  History does have an odd way of repeating itself.  I wonder how many politicos have Angelo Mozilo targeted as an "ultimate" fall guy.

Posted by Howard Wilson (Wilson Than Real Estate) over 10 years ago

Oh, Good questiond Dora and Vince, If I get time i will call the AG's office tommorow..

By the way, you might be interested in this..




Posted by Chris Giddings (Realty One Group) over 10 years ago

When are we actually going to hold buyers responsible.  The bank did not twist their arm...they were simply doing what they do best trying to make money

Posted by Carol Perez (Tarbell Realtors) over 10 years ago

First of all, you just need to go to the TV or their website.  I am sure that you can still find them on there.  I was watching TV last night and Lending Tree offered a rate that it would take over 3.00% to buy down to.  Who is monitoring this stuff!

As for Bank of America?  If your a broker and your doing ANY kind of business with these jokers, Shame on you.  HR 315 that we all fought so hard was introduced just 3 days after B of A pulled out of the wholesale market ( I thnk they thought no one would fight the bill) by the good representative from the Great state of North Carolina.  Within a week of pulling out of wholesale Bank of America came out with their NO FEE loan.  You know the one they bump the rate on and pay with the SRP that the LO is not getting?  Any one want to guess where bank of america is based?  Anyone but me connecting the dots?

Bank of America wants to put the broker out of business, hire those of us who will work for $2500 base and $50 a file. 

Posted by Tony Bolodar, TX Residential Mortgage Loan Originator, #1320876 (Priority Financial Network) over 10 years ago

I think we will see this rash of lawsuits against CW and others that did alot of loose lending. When you cant keep your home you have to blame someone!

Posted by Chip Jefferson (Gibbs Realty and Auction Company) over 10 years ago

Esko if these things happen they will have a ripple affect through out our Industry, and have an impact that will go beyond Countrywide.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago


Looks like the purchase is going through as the shareholders voted to approve the deal.

Posted by Esko Kiuru over 10 years ago


B of A has a lot of cleaning up to do.

Posted by Esko Kiuru over 10 years ago


Seems that politics was also in play with these lawsuit announcements.

Posted by Esko Kiuru over 10 years ago


That's a good question.

Posted by Esko Kiuru over 10 years ago


We sure like to repeat things.

Posted by Esko Kiuru over 10 years ago


The AG probably has a whole list of these items.


Posted by Esko Kiuru over 10 years ago


Buyers should bear some responsibility in all of this.

Posted by Esko Kiuru over 10 years ago


That's good commentary, makes you think.

Posted by Esko Kiuru over 10 years ago


If laws and rules were broken, then the lawsuits have merit.

Posted by Esko Kiuru over 10 years ago


The ripple effect can happen, although it'll likely take a long time because these lawsuits are going to drag out.

Posted by Esko Kiuru over 10 years ago