An $8.7 Billion Settlement With Countrywide

From Suntimes.com:

Illinois Attorney General Lisa Madigan’s office helped resolve a lawsuit that alleged Countrywide put people into loans, mostly subprime loans, that the would-be homeowners could not afford.

HERE’S WHY: Wall Street figured out it could lap up cash flow from securities backed by subprime mortgage loans. And subprime loans, though risky, produce higher returns than conventional loans. Countrywide wanted in on the action, so it increased its origination of subprime loans to $44 billion in 2005 from $9 billion in 2002, the lawsuit said.

HERE’S HOW: Countrywide used various tactics, such as requiring no paperwork to show a borrower’s income, falsely inflating the borrower’s income, not explaining that the interest rate on a loan would skyrocket after a certain period, and giving loans in which the borrower who paid only a minimum payment would get hit with a higher principal and interest payment than the loan originally required, according to attorneys who handled the case in Madigan’s office.

“This settlement holds the No. 1 mortgage lender in the country [Countrywide] accountable for deceptively putting borrowers into loans they didn’t understand, couldn’t afford and couldn’t get out of,” Madigan said.

Countrywide was the largest lender in Illinois from 2004 through 2006, selling 94,000 loans total. It also was the largest in the Chicago area, selling 21,000 loans in the seven-county metro area in 2006.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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