FHA Book

Countrywide Continues To Get What it Deserves

In addition to several other suits against Countrywide Financial, the state of Illinois is now suing Countrywide and its top executives. According to today’s article in the NY Times:

The civil lawsuit asks for an unspecified amount of monetary damages and requests that the court require Countrywide to rescind or reform all the questionable loans it sold from 2004 through the present. The attorney general, Lisa Madigan, also asked that Mr. Mozilo contribute personally to the damages and that the court give her office 90 days to review loans serviced by Countrywide that were in foreclosure or soon would be.

“People were put into loans they did not understand, could not afford and could not get out of,” Ms. Madigan said. “This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo.”

The lawsuit adds to the considerable legal risks facing Bank of America as it prepares to absorb Countrywide in a takeover announced in January. Countrywide and its executives have been named as defendants in shareholder lawsuits, and the company’s practices are the subject of investigations by the Securities and Exchange Commission, the F.B.I. and the Federal Trade Commission, which oversees loan servicing companies.

I fully support the decision of the state’s attorney general to not only go after the company as a whole, but the money grubbing executives as well. It is high time that those in big business start treating their customers with some respect. Here’s hoping that this case will help the many people in Illinois who have suffered because of Countrywide’s predatory practices.

Subprime Plan Falls Short

The new subprime freeze plan announced today by Bush and Paulson will aid up to 1.2 million homeowners, but not the ones who are already feeling the pain of resetting arms. According to CNN.com:

But the freeze is limited. It excludes anyone more than 30 days late at the time the mortgage would be modified or anyone who has been more than 60 days late at any time within the previous 12 months.

It also only covers borrowers with adjustable rate mortgages (ARMs) resetting beginning in 2008 and leaves out any who are judged capable of continuing to make mortgage payments at the higher reset rates.

I think this is a case of too little, too late.