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More states have filed charges against Countrywide (NYSE: CFC) for aggressive marketing and giving loans which were highly risky. Washington and California have joined Illinois in the actions.
Up until now, Bank of America (NYSE:BAC), which is buying Countrywide, has been sticking to its story that it will close on its purchase of the mortgages company. The media has written a million times that the big money center bank might pull out of the deal. That actually became a bit more likely with the new states' actions.
According to The Wall Street Journal, Kurt Eggert, a law professor at the School of Law at Chapman University said, "Countrywide could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed." Since that number could be well into the billions of dollars, the potential damages are rising fast.
Countrywide could spend tens of millions of dollars on legal fees and countless hours in court over the next several years. That has become much clearer in the last few days.
BAC would be better off to let CFC go out of business and just buy its assets. Maybe the bank never intended to close the deal. Maybe that was its plan all along.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
6-26-2008 @ 3:42PM
william lindblad said...
Be a lot of company at this weenie roast. JP/Chase just did hypo and probably a lot more that the world does not hear about. Fed FBI investigation went from 1200 to 1700 in short order on the white collar front. More waste of the taxpayers money as these usually cost more than they accomplish. True, CWF is going to get sued by many but I bet at least 50% will be baseless and get tossed. This is getting like the cases for whiplash - the neck brace goes on after the lawyers arrive.
6-27-2008 @ 8:57AM
pamela said...
If Bank of America plans to keep Countrywide’s Loan Officers and company Appraisers why eliminate the name. So many loan brokers depend on having Appraisers that can give them any value they want and the largest Lender in the Country is still using the same Appraisers that over-value Real Estate. Maybe Bank of America can start the whole cycle over again and sell their bad loans to other investors. Greed never seems to stop it just changes the name.