Magazine article American Banker

Countrywide Works with Ill. AG

Magazine article American Banker

Countrywide Works with Ill. AG

Article excerpt

Countrywide Financial Corp. is cooperating with Illinois Attorney General Lisa Madigan, who has subpoenaed documents related to origination practices.

"We're looking to see the extent and the type of loan practices engaged in by Countrywide in the state of Illinois," Deborah Hagan, the chief of the consumer protection division at the Attorney General's Office, said Thursday. "We'd like to follow the life of the loan all the way up to the securitization process."

The office is "in the process of receiving numerous documents" from Countrywide, Ms. Hagan said.

The subpoena was issued in mid-September under the state Consumer Fraud and Deceptive Business Practices Act, she said. Countrywide did not return a call seeking comment by press time. The New York Times reported the investigation Thursday.

Several factors prompted the investigation, Ms. Hagan said. The Attorney General's Office has received complaints about the lender's origination and servicing practices, she said. Borrowers said things like " 'I got into a loan I didn't understand and that I couldn't afford, and I can't get out because there's prepayment penalties.' " (She noted that such "universal" complaints have been made about other lenders.)

Also, the state investigated a mortgage brokerage that "did a lot of business with Countrywide," and "we saw a lot of problems there," Ms. Hagan said. News reports in the Times and other publications this year, in which former employees described questionable practices, were another reason the state decided to take a look at Countrywide, she said. …

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