BofA Takeover Of Countrywide Gets OK

Approval Comes As Mortgage Lender Is Sued By Calif. And Ill. For Deceptive Practices

(AP)  Countrywide Financial Corp. says stockholders controlling a majority of the mortgage lender's outstanding shares have approved the company's takeover by Bank of America Corp.

Countrywide says more than 69 percent of outstanding shares were voted Wednesday in favor of the transaction at a stockholders meeting in Calabasas, Calif.

The lender says the deal is expected to close on July 1.

Countrywide agreed to sell itself in January for about $4 billion in stock. The deal is now valued at about $2.8 billion, reflecting a decline in Bank of America's stock price over the past six months.

Countrywide is accused of using misleading advertising and other unfair business practices to trick borrowers into taking on risky home loans they didn't fully understand, in a lawsuit filed Wednesday by the California attorney general's office.

The lawsuit stems from information gathered under subpoena after the state launched a probe last year into the troubled company's business.

It also came on the same day Illinois attorney general filed a lawsuit alleging Countrywide engaged in "unfair and deceptive" practices to get homeowners to apply for risky mortgages far beyond their means.

In the complaint filed in Superior Court, California Attorney General Jerry Brown asserts that Countrywide violated the state's unfair business practices and false advertising laws with just about every action it took to market and originate some of the most popular - and potentially risky - types of home loans in recent years.

"Defendants viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers' long-term ability to afford them and to sustain homeownership," the state claims in the suit, which also names as defendants Countrywide Chairman and CEO Angelo Mozilo and David Sambol, the lender's chief financial officer.

Countrywide did not immediately return a call seeking comment.

The state claims the company misled customers about the workings of home-equity loans and some types of adjustable-rate mortgages, including pay-option loans, "hybrid" interest-only loans and low-documentation loans.

These loan types, which many other lenders offered during the housing boom, featured low initial payments and the potential for sharp increases after a few years. They now account for a large portion of the mortgages that have become delinquent or gone into default in the past year.


The lawsuit alleges Countrywide obscured the potential risks in the loans, misled consumers about payment terms, prepayment penalties and other obligations, and told borrowers they would be able to refinance before the interest rate on their loans adjusted.

"Defendants knew, or by the exercise of reasonable care should have known, that these statements were untrue or misleading at the time they were made," the lawsuit states.

As the nation's largest mortgage lender and servicer, Countrywide has been under scrutiny by federal and state authorities. It also faces numerous other lawsuits related to its lending practices.

The Calabasas, Calif.-based lender agreed in January to sell itself to Bank of America for about $4 billion in stock. The acquisition, now valued at around $2.8 billion, received clearance from the Federal Reserve earlier this month.

[kennedy7955]

"Remember, the state is here to make money to support it''s desires, not to help the taxpayer. And this is just another source of revenue. Posted by payasyougo"

Great post, well said.

[ianlou]

The only good news with Countrywide going away is we no longer have to watch that funny looking putz on TV talking about all the things you don''t need to get a loan.

[payasyougo]

"If anything, CW is guilty of giving loans to people who did not deserve them. This is completely the opposite of unfair lending. If attorney Generals want to attack CW, the true and fair attack would be on behalf of the investors."
---------------------
The AG isn''t interested in CW or former homeowners. This is an attempt by a state to extract funds from CW by playing on the timing of the congressional blame game tied to homeowners that never should have been given a home loan in the first place.

Remember, the state is here to make money to support it''s desires, not to help the taxpayer. And this is just another source of revenue.

[faith_in_w]

I have to thank all of the sucker liberals who made me making that $326,000 on shorting CFC stock last year possible.

[kennedy7955]

I am in the mortgage business but have never been an employee of Countrywide.

[kennedy7955]

CW broke up the business of doing prime/government loans and subprime from the beginning. A CW loan officer had only the option of selling a customer a prime loan or a government (VA, FHA) loan. If the customer did not qualify for one of these type loans, it was then sent to the subprime company. The loan officer got nothing when he sent this loan, so there was all the incentive to make it work with the best programs and no incentive to send the client over to subprime company. The customer was put in contact with the subprime lender as a last resort. If anything, CW is guilty of giving loans to people who did not deserve them. This is completely the opposite of unfair lending. If attorney Generals want to attack CW, the true and fair attack would be on behalf of the investors. CW customers were treated more than fair and the proof is in all the mortgage-unworthy homeowners.

[kennedy7955]

How many of the subprime loans written have gone bad? Numbers vary, but if the number was 5 defaults out of 100 subprime loans, that would still leave 95 families owning their home that likely would not have with current guidelines. If you think these subprime borrowers got shafted by the Loan officer, then why haven%u2019t these borrowers refinanced into a prime loan? The answer is they couldn%u2019t qualify then and they can''t now. These reasons are the fault of the borrowers.

[kennedy7955]

What exactly did Countrywide do wrong? They loaned money to people who should not have had been offered loans. Is that unfair? Yeah, its unfair to the investors that got stuck with these *** loans but it certainly was more than fair to the credit-income-asset challenged borrowers.

[kennedy7955]

Don%u2019t confuse CW with the subprime lenders that have gone out of business. These lenders sold anyone who came across their paths a subprime loan if they would take it %u2013 including those with good credit, assets and income.

[closethippy1]

There should be a country wide action suit against Countrywide and their crooked cohorts who helped spike up real state prices.
I truly don''t understand how they haven''t been prosecuted by the law!

[tireslinger]

Interesting...CountryWide holds the mortgage to my home. My credit is excellent, and my job is and has been stable. This article does however, remind me of how persistent my CountryWide agent was, in trying to talk me into a HELOC, with a variable interest rate. I considered it for about five minutes, as I am not a risk taker, when it comes to finances.

[downtowner97]

For years their ads said "No one can do what Countrywide can". If you have any kind of grasp of the English language, you realize that means that not even Countrywide could do what they were doing. It''s kind of like a bottle of acid that disolves everything.

[rneva]

This story is absurd! Bank of America is robbing Americans royally on credit card debt. What good does it do to let one felon take over for another felon? The problem is capitalism and our devotion to it. It has to die in order for us to survive!

[setumstrt9]

"These people are gonna pay!!!!" - Barak Hussien Obama

"My people got sweetheart loans from them? Nevermind" - Barak Hussien Obama

[tootall10142]

ONLY IN AMERICA!

[docpeter-2009]

dmorg4c wrote, "This aint over yet just wait and see the economy is going to crash hard."

I have been saying this for over 4 years. The stock market is very over priced and cannot be sustained. Soon it will fall and keep falling for a while. Fortunately, the US govet. and the SEC and FTC have options of closing Wall Street every day if the market falls more and a certain % in a day (not really sure right now what that % is).

The price of oil and gas is going up way too fast, so fast that we are creating a situation where, what used to be middle class, is becoming the working poor. We are going to see, in the near future, that people won''t be able to afford to go to work because EVERYTHING costs too much. It will be either eat or buy gas to go to work.

[docpeter-2009]

Once again, TruUSA you have it ALL WRONG!

Writing in Hillary''s name won''t get her elected. It will ONLY get McCain elected by taking Democratic votes away from Obama.

[erichsh]

How many people have heard that both Sen. Christopher J. Dodd (D-Conn.) and Sen. Kent Conrad (D-N.D.) got preferential home loans from Countrywide Financial Corp? And Dodd is the Banking Committee Chairman! As usual, because of the "D" next to their names, these highly relevant stories were buried by the MSM. You would think that a story about Countrywide''s loan practices would bring this up - fat chance.

[dmorg4c]

This aint over yet just wait and see the economy is going to crash hard.