LOS ANGELES (CN) – Attorney General Jerry Brown says he has new evidence that Countrywide bent the rules to put homeowners into inappropriate loans and dumped mortgages into the secondary market.
The charges in Superior Court echo those Countrywide faces across the nation: using a commissions system that rewards loan officers for talking homeowners into risky adjustable-rate mortgages with higher rates and fees than they qualify for, and pushing such loans regardless of a candidate’s qualifications.
Those claims are updated with California details. One homeowner, already saddled with half as much debt as income, agreed to a one-month adjustable rate loan, based on the loan officer’s claim that he would be able to refinance because his home would keep appreciating, the state said. The borrower defaulted after 6 months.
Another borrower got a loan with a 3-month teaser rate, despite red flags from Countrywide’s recommendation program about the borrower’s probability of repaying. That homeowner defaulted after 10 months.
More than 21 percent of Countrywide’s loans were in delinquency or foreclosure by April this year, the complaint states. In California, that adds up to more than $917 million in late payments.
Brown demands $2,500 for each violation of California’s Business and Professions Code.