The state of Nevada has filed a lawsuit against Countrywide in Clark County court alleging that the company deceived consumers through deceptive lending practices.
Bank of America recently announced it was rebranding Countrywide and the practices that company engaged in are no longer possible in a tight credit market. So beyond political grandstanding, a lawsuit by Nevada asking Countrywide to stop its bad lending practices seems pointless.
Elizabeth Martinez is a house cleaner with limited English and unsophisticated knowledge of business and financing. In May 2007, Countrywide Home Loans approved Elizabeth with her monthly income stated clearly on her loan application of $2,810. This was less than the total amount she owed each month on the loan. Countrywide processed the loan with “stated income” which means that didn’t have to even verify her income, limited as it was.
This complaint filed in California state court is like others of its kind, spends several pages outlining the train wreck of the housing bubble, the creative financing schemes, the pressure to make loans that shouldn’t be made and the extremely lax oversight. The tone of the complaint is over-heated with too many exclamation points. The courts should still be a place where precise and objective language is used to present a case based on strong facts well-reasoned.
A complicated deal cut by the Attorney Generals of 15 states required Countrywide to reduce payments on thousands of mortgages to the tune of more than $8 billion. However, Countrywide isn’t on the hook for that amount because they sold their interests to various trust. This forces those trusts to suffer the depreciated value of these debts even though it was Countrywide that had engaged in the predatory lending. Now the trusts want Countrywide to make up the $8 billion difference that they agreed to write down.
Remember, Bank of America bought Countrywide and that stock went up today. I guess the stock market isn’t too worried. At least not today…
Complaint courtesy Courthousenews
Reading Tea Leaves by Randy Wilson 