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Angelo Mozilo's nine lives may be about to run out. So far the CEO of Countrywide (NYSE:CFC) has avoided the most severe taint from the collapse of his mortgage company and its questionable practices.
The State of Illinois, the land of Lincoln, will bring civil charges against Mozilo and the firm he started. According to The Wall Street Journal, In a draft of the complaint, Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans.
One of the main pieces of the complaint is that mortgage brokers pushed loans on people, even it they could not afford them.
Of course, as is always true with charges bought by attorneys general, there is some politics behind the claim. There have been a number of Countrywide foreclosures in the Illinois.
To some extent the politics do not matter. Based on other investigations of Countrywide, it appears that management did quietly push its people to move loans out like cars off an assembly line.
What is most troubling is that no one in government anywhere caught onto the practice earlier.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
6-25-2008 @ 12:36PM
Americas Watchdog said...
Great Blog Doug;
We have the National Mortgage Complaint Center & everything being said in the Journal is true.
CFC was doing the following:
Equity stripping just as an example in Compton & Watts, California. Here.....CFC would send a low income borrower a letter saying you can get $10,000 right now with no credit check or appraisal. Its tragic, but the low income borrower would not read or understand the fine print about the pre payment penalty, the up to 4% "loan discount fee", the other junk fees, etc. In the end the borrower would get the $10,000, but it might cost them $30,000 in equity to get it. A month after the borrower got the $10,000-----$30,000 loan CFC would send them another letter saying "we can give you another $10,000 with no credit check or appraisal...............once again another $30,000 loan with a prepayment penalty.
We also know CFC retail offices would have sales contests to see who in the office could sell the most pay option adjustable rate mortgages. The winner would get a trip to Hawaii. The loser (the borrower) would end up in many cases losing their home because they did not understand the product.
WE CAN PROVE IT ALL!
Which brings us to, Why Is Bank Of America Buying CFC? Are they out of their minds? In 2003 CFC's adjustable rate mortgages were about 17% of their originations. By 2004-2006 they were 50% of their originations. Most of these ARM's are pay option ARM's=Foreclosures. Again what does Ken Lewis CEO of Bank of America see that we do not see? Or is Ken Lewis of Bank of America about to suffer the fate of Wachovia's Ken Thompson very, very foolish acquisition of Golden West AKA World Savings---------the Pay Option Prince? CFC was/is the king of pay option mortgages. Go figure!