Via the Trib (http://www.chicagotribune.com/business/chicago-illinois-countrywide-financial-suit-jun25,0,2336686.story):
Attorney General Lisa Madigan filed an 81-page lawsuit Wednesday in Cook County Circuit Court against Countrywide Financial Corp., the nation's biggest mortgage lender, alleging that it engaged in unfair and deceptive conduct in creating, originating, marketing and servicing what turned out to be many unaffordable mortgages for Illinois homeowners.
The lawsuit comes after a nine-month proble by Madigan's office into Countrywide lending practices.
Besides Countrywide and its Countrywide Home Loans Inc. unit, the complaint also names as defendants Countrywide's subprime lending unit, Full Spectrum Lending; the company's servicing arm, Countrywide Home Loans Servicing LP; and Angelo Mozilo, the co-founder and former Countrywide whose name has become synonymous with the excesses of the subprime mortgage industry.
The complaint alleges that Countrywide sold risky and costly loans to borrowers who couldn't afford them.
"Countrywide's unfair lending practices have harmed tens of thousands of borrowers who've been placed in unaffordable loans and, as a result, our communities are now being destabilized by a skyrocketing number of home foreclosures," Madigan said in a statement.
The accompanying video is also pretty interesting - she talks in more detail about Countrywide's "hybrid ARMs", which in some cases allowed borrowers to make such low payments initially that their debt increased.
Sorry - for whatever reason, the comments had unintentionally been turned off. Fixed now.
Choice 1: Pay rent and not build any equity.
Choice 2: Accept the offer for an unattractive loan arrangement that increases that liklihood I'll be able to own vs. rent. (A) Pay a lower amount for the next 3-5 years hoping that the interest rates will remain low (B) Pay a higher amount to insure against interest rates rising
Pros: Home ownership is a helpful mechanism to build equity/wealth. This path increases the liklihood that I'll be able to own my home. Even if I could not afford choice 2B, the pro here is still valid.
Cons: If interest rates go up or the market goes down, my payment will no longer be affordable and I'll have to sell my home and go back to the rental market. If the market does down, I might lose any equity I built up and possibly lose some money.
The downside is not attractive, but we can't pretend it never existed and claim to be victims. We might as well give all our land the goverment and pay them rent if we're going to make that argument.
The lawsuit made CapFax today: http://thecapitolfaxblog.com/2008/06/26/attorney-general-sues-countrywide/
The AG's complaint is online at http://www.illinoisattorneygeneral.gov/pressroom/2008_06/countrywide_complaint.pdf