Los Angeles Personal Injury Lawyer - countrywide

Countrywide Mortgage Modification to Help 125,000 Struggling Californians

Paul Kiesel — Tue, 07 Oct 2008 15:54:34 GMT

Bank of America, which purchased Countrywide Financial over the summer, will help almost 125,000 Californians who are struggling with pay option arm loans originated by Countrywide.

The move that was announced by Bank of America yesterday could save mortgage holders billions of dollars and could also keep over 400,000 borrowers nationwide in their homes. Countrywide's owner (B of A) agreed to the nation's largest loan-modification program to settle charges of lending abuse (TILA violations) brought by California and other states like Illinois and Connecticut.

The program may reduce borrowers' payments made to Countrywide and provide other benefits that are being estimated at $9 billion nationwide. It has not been determined if the program will switch customers to fixed-rate loans, reduce the interest or principal of the loan or use a method that samples all of the above.

The plan allows for a foreclosure freeze for most borrowers (borrowers that are likely to be helped by the loan modification program and who would qualify under its criteria) until Countrywide determines the borrowers' eligibility.

However, not all loans will be saved, as bank officials were cognizant that some borrowers were so far underwater that investors who own the loans, who purchased the loans via mortgage-backed securities, would have to cooperate, and this appears unlikely. So far investors have been inexorable in not participating in any modification programs as the one proposed yesterday, as they are also trying to get their own money back from Countrywide.

California Attorney General Jerry Brown will announce and detail the value of Countrywide's anticipated $3.5 billion loan modification program today that will help California homeowners who took out these adjustable-rate loans from 2004-2007.

This move by Bank of America sets a precedent for how other homeowners throughout the State of California, who've been victims of lending abuse by other lenders, can seek a remedy and have their loans modified.

Originally posted at InjuryBoard by Paul Kiesel

400,000 Countrywide Mortgages to be Modified

Paul Kiesel — Mon, 06 Oct 2008 20:59:27 GMT

From USA Today: Nearly 400,000 homeowners will be able to have their mortgages made more affordable under an agreement Monday by Bank of America to modify mortgages originated by Countrywide Financial in the largest predatory lending settlement in history.

Bank of America took over Countrywide in July, and Monday's announcement will settle claims by attorneys general in 11 states. Bank of America has agreed to modify loans for homeowners holding sub-prime loans and option adjustable-rate mortgages with Countrywide.

The bank says the settlement could result in up to $8.4 billion in interest-rate and principal reductions for those homeowners.

The loans must have been serviced by Countrywide and originated before Dec. 31, 2007.

The Countrywide settlement will dwarf the $484 million settlement with Household Finance Corporation in 2002, according to the California attorney general's office. Attorneys general in states including West Virginia, California, Connecticut and Illinois had argued that Countrywide deceived borrowers by misrepresenting loan terms, loan payment increases, and the borrowers' ability to afford loans.

"Countrywide's lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn't understand and ultimately couldn't afford," California Attorney General Edmund Brown said Monday.

Details of the agreement:

• Loan modifications will be made for eligible borrowers who are seriously delinquent due to loan features such as resets in adjustable rates. Modifications will also be made for those likely to become delinquent.

• Foreclosure sales will not be initiated or move ahead for borrowers who are likely to qualify until a final decision has been made on whether a homeowner is eligible for a modification.

• Homeowners must occupy the home at issue as their primary residence.

• Eligible homeowners will not be charged loan modification fees, and prepayment penalties will be waived for those with sub prime and pay-option loans that Countrywide or its affiliates own.

A pay-option loan permits borrowers to pay only a small portion of interest and principal owed each month. This can cause the loan balance to balloon.

Some $150 million has been set aside for borrowers in certain states who suffered foreclosure or are at serious risk of foreclosure, and another $70 million is earmarked for relocation assistance to borrowers unable to keep their homes.

Before its sub prime mortgage loans began to falter, Countrywide was the largest U.S. mortgage lender. It was acquired for about $4 billion in stock by Bank of America. The cost of restructuring the loans is within the range of losses Bank of America estimated when acquiring Countrywide.

"Since acquiring Countrywide in July, we have committed significant resources and developed innovative programs to help as many Countrywide customers as possible stay in their homes," said Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services.

Read Bank of America's full press release here.

Originally posted at InjuryBoard by Paul Kiesel

McCain-Palin Economic Plan Lacks Transparency in Wall Street Journal Op-Ed

Paul Kiesel — Wed, 10 Sep 2008 19:03:12 GMT

John McCain and Sarah Palin gave their opinions on the federal government's takeover of Fannie Mae and Freddie Mac, yesterday, in the Wall Street Journal. Here are a few of the pair's stances: "The bailout of Fannie Mae and Freddie Mac is another outrageous, but sadly necessary, step for these two institutions [. . .] Treasury has broadly followed the McCain plan, outlined months ago, and gets at the short-term heart of the problem [. . .] [The federal bailout] terminates future lobbying, which was one of the primary contributors to this great debacle [. . .] Reforms are necessary now to make mortgage lending and banking organizations more transparent," (online.wsj.com, 9/9/08).

First, the bailout was necessary and it is unfortunate that it had to occur. Could it have been prevented? Maybe years ago, before deregulation bills laxed lending industry rules, like the Commodity Futures Modernization Act of 2000, thus, allowing the lending industry to act like a teenager whose parents were out of town for the weekend... Or several years. Economists, conservative or liberal, will agree on that.

However, when McCain and Palin suggest that the Treasury has "broadly followed the McCain plan, outlined months ago," is that the same McCain plan that the senator discussed with reporters back in March: "Some Americans bought homes they couldn’t afford, betting that rising prices would make it easier to refinance later at more affordable rates [. . .] Of those 80 million homeowners, only 55 million have a mortgage at all, and 51 million homeowners are doing what is necessary — working a second job, skipping a vacation and managing their budgets to make their payments on time [. . .] it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," (New York Times, 3/25/08).

I guess March would qualify as months ago. And it does seem like McCain is expressing his economic policies (or laying out "McCain's plan") and how he'd react to the mortgage/housing crisis as Commander-in-chief: that a bailout is a non-option, which is made clear when McCain said, "[. . .] what is not necessary is a multibillion dollar bailout for big banks and speculators, as Sens. Clinton and Obama have proposed. There is a tendency for liberals to seek big government programs that sock it to American taxpayers while failing to solve the very real problems we face." But, it doesn't appear that the Treasury department is using "the McCain plan," as Palin and he suggest. The plan the Treasury is following, not to a tee, but more closely than McCain's, is the plan that both senators Hillary Clinton and Barack Obama called for the same week that McCain was criticizing homeowners, many of who were suffering from mortgages littered with TILA violations.

As to the lobbyists that McCain attributes as being "one of the primary contributors to this great debacle," why is it that one of those lobbysists, former Texas senator Phil Gramm (a former lobbyist for UBS), was McCain's former economic adviser and co-chair, until he was forced to leave McCain's campaign in July after making some careless remarks? Why would McCain surround himself with Gramm, a long time political ally and personal friend, along with seven other lobbyists, and at least 20 other major McCain fundraisers who have lobbied on behalf of Fannie and Freddie in recent years?

Those seven lobbyists working on the McCain-Palin campaign, courtesy of CNN.com:

• One: Campaign manager Rick Davis is a major telecommunications lobbyist.

• Two: Senior foreign policy adviser Randy Scheunemann recently faced scrutiny over his foreign lobbying on behalf of the Republic of Georgia, which has been embroiled in a military conflict with Russia.

• Three: Senior adviser Charlie Black was a foreign lobbyist for dictators in Zaire and Angola in the 1980s, fodder for the liberal group MoveOn.org.

One of the group's recent ads charged, "Charlie Black said he didn't do anything wrong. John McCain should tell Black he did. Call John McCain and tell him to fire Charlie Black."

• Four: Frank Donatelli, the Republican National Committee's liaison to the McCain campaign, has had clients including Exxon Mobil.

• Five: Economic adviser Nancy Pfotenhauer has lobbied for corporate giants like Koch Industries.

"Both John McCain and Sarah Palin have challenged special interests, challenged their own party. That's the test of courage," Pfotenhauer has said.

• The final two lobbyists are McCain's congressional liaison, John Green, and national finance Co-chairman Wayne Berman. They both lobbied for Fannie Mae, the troubled mortgage giant.

So it's more than likely that the "lobbyists" McCain refers to as enablers in this mortgage crisis aren't leaving the political landscape anytime soon, especially if McCain becomes president.

Finally, in regards to McCain's and Palin's call for reforming the two mortgage giants and providing better oversight to the lending industry as a whole, why is it that Phil Gramm's name continues to be mentioned as a possible Treasury Secretary in a McCain-Palin administration? Gramm is the author of the Commodity Futures Modernization Act passed in 2000. There is no coincidence that his energy and lending deregulation bill, among several other deregulation bills like Newt Gingrich's Home Ownership and Equity Protection Act of 1994 (which was written to protect consumers against predatory loans, but it instead helped spark the subprime boom), opened the door for a lot of the problems seen throughout the subprime crisis (i.e. see what happened or is happening at Bear Stearns, Countrywide, IndyMac, WaMu, etc.).

It was through Gramm’s deregulation (as a senator) that helped set the stage for an explosion of banks slicing up subprime mortgages, bundling them with other mortgage slices, to hide the credit risks (and not being transparent about how the mortgages were written as millions of option ARM mortgages violated the Truth in Lending Act), and selling mortgage stew to other investment firms. And as a lobbyist, just as recently as December 31, 2007, Gramm was lobbying for Swiss bankers to help kill the Helping Families Save Their Home and Bankruptcy Act, a bill that would have let bankruptcy judges adjust mortgage terms so American families facing foreclosure could repay their loans and keep their homes.

Is this the reform that McCain potentially plans to bring with him to the White House, if he's elected? Is this the "promise [to] the American people that our administration will be different?"

People change their minds all the time. Both Democrats and Republicans do this constantly in Congress (McCain was initially against the Bush tax cuts and then favored them; Palin was for the "Bridge to Nowhere" and then, after becoming Governor of Alaska, she wasn't for it). President Bush has done this, too, as he signed a housing bill in late-July that he adamantly stated a week earlier he would veto. But on the issues brought up in the Wall Street Journal Op-Ed by the two self-proclaimed mavericks, with McCain and Palin calling for reform to the lending industry, more transparency amongst lenders and less future risk of a taxpayer bailout (issues that McCain has said he's not too sharp on and relies on his economic advisers opinions to make up for his lack of experience, "The issue of economics is not something I’ve understood as well as I should [. . .] I would rely on the circle that I have developed over many years of people like Jack Kemp, Phil Gramm [. . .]”), it seems like there's just too much old "Washington" and lobbyist baggage to fit on the "Straight Talk Express" plane.

People change all the time, however, as the old adage goes: You can't teach an old dog new tricks. An old maverick is likely the same.

Originally posted at InjuryBoard by Paul Kiesel

Prime Borrowers Foreclosing at a Higher Rate than Subprime Borrowers

Paul Kiesel — Thu, 28 Aug 2008 20:25:53 GMT

The Hope Now coalition released information yesterday that finds prime foreclosure starts have finally moved ahead of subprime foreclosure starts for the first time since the industry coalition began (Hope Now originated last July). And, likely, for the first time in a much longer timeframe, according to HousingWire.com.

Since the media's attention has recently been focused squarely on the Democratic Convention, Republicans' reactions to it, and the upcoming Republican Convention, most housing news (good or bad; and most of it's been bad) has gone unnoticed.

Prime borrowers do have the potential of being helped by the housing rescue bill that was passed last month, but the problem is that some of these borrowers were put into "creative mortgages" like option ARM loans with teaser interest rate payment options, and those loans have been more difficult to reform under new lending rules. (Plus, lenders don't want to modify the loans quite yet; they're still hoping they won't have to absorb such large losses that they technically brought on themselves when they decided to recklessly flood the marketplace with so many porous loans.) It's also unfortunate that prime borrowers who were sold "creative mortgages," were largely unaware that throughout the promissory notes, especially in states like Arizona, California, and Florida, were several TILA violations.

Bank executives have already been beating the drum that evidence of prime borrowers going into foreclosure shows that fiscally smart borrowers tried to manipulate the system, but if one is to believe that logic 1. It's a swipe at subprime borrowers (It assumes they're not intelligent) 2. Excuses lenders of taking advantage of any and all borrowers and 3. Assumes that TILA violations did not occur or, if they did, it was in such minuscule numbers.

The point is that option ARM loans were so cunningly crafted, and were promoted vigorously through print, television and mail advertising, that borrowers with good credit and bad credit, found themselves facing lenders whose best interests were in their own short-term profit and had such a myopic view of what economic hardships could precipitate throughout the country via irresponsible lending, that it was an unfair fight for any potential homeowner from the moment Phil Gramm was able to slide his Future Commodity Modernization Act of 2000 into law.

Bear Stearns, Countrywide, IndyMac and dozens of other banks are proof that the lending industry not only loaned money irreverently and had no concern for a borrowers ability to repay the loan, but that almost all of the lenders and Wall Street enablers were also willing to eat their own.

Originally posted at InjuryBoard by Paul Kiesel

Prime Mortgages Threaten Potential Housing Recovery

Paul Kiesel — Tue, 12 Aug 2008 20:28:19 GMT

CNNMoney.com published an article today that reiterates a point I brought up three months ago in a blog titled, "The Next Mortgage Crisis: Prime Borrowers." CNN's article relates how more borrowers with good credit (prime borrowers) are defaulting on their home loans, and that's going to make it even harder for the still slumping housing market to recover.

Here's what I originally wrote on May 12, 2008:

The time is coming when interest rates will reset in prime loans that were given to people with good credit in the last two years. These resets will have ramifications that are as bad or worse than what's taken place in the subprime market.

The type of loan that begot the subprime crisis was the "2/28 loan." It is a 30 year loan, however, the first two years of it included a teaser rate payment option (established through fraudulent TILA forms and lack of disclosure) before the interest rate rose. Except, in many cases, the interest rate rose after 30 days from the origination of the loan. Therefore, people were sometimes, if not often, in a negative amortization loan, expediting the interest reset date. Hence, the subprime mortgage crisis and why so many lenders and servicers have their heads in the sand, and how this has all led to the current onslaught of foreclosures that started to take place six months ago.

Now prime borrowers, too, got loans that began with lower than usual payments and if someone bought or refinanced a home in the past few years, it's probable that they have one. The "option ARM" loan or "jumbo option ARM" loan (a loan greater than $417,000) will be the downfall for prime borrowers. Both loans give the borrower the option of paying less than what the interest on the loan charges, which is a "negative amortization" loan (also, the words "negative amortization" were not disclosed on most TILA forms, therefore, many borrowers were unaware of the repercussions of this type of loan).

With Washington Mutual, Countrywide, IndyMac, and Golden West (now part of Wachovia), writing well over $500 billion worth of option ARM loans since 2005, it's scary to see that the mortgage meltdown has already hit California when almost none of these "prime" loans have reset. But they will, and that day is coming very soon, possibly as early as the end of this year.

The CNNMoney article explains how subprime mortgages set the current housing meltdown in motion and Alt-A loans added to the number of defaults and foreclosures. "Now, as prime loans are added to the mix, the resulting foreclosures could haunt the housing market for a long time, according to Global Insight's Patrick Newport," (CNNMoney.com, 8/12/08).

On top of the next wave of foreclosures stemming from prime borrowers defaulting, will be the further depreciation of home prices, due to more inventory and foreclosed property coinciding with fewer buyers and tougher lending rules. In fact, the amount of vacant homes on the market (2.8%) is near a historic figure and is up about 50% from three years ago.

Ultimately, the CNNMoney article agrees with my thesis from three months ago: There will be more difficult times ahead before the housing market and lending industry balance and recover.

Originally posted at InjuryBoard by Paul Kiesel

SEC Investigating Former Countrywide CEO Angelo Mozilo, Accused of Misleading Investors

Paul Kiesel — Fri, 08 Aug 2008 19:37:02 GMT

Bank of America, which acquired Countrywide in July, said in a regulatory filing yesterday that the Securities and Exchange Commission was conducting a formal inquiry of the lender and that it had responded to subpoenas from the federal agency, according to the Los Angeles Times.

The SEC's investigation is focusing on whether or not Mozilo violated insider-trading law and whether Countrywide's financial disclosures misled investors. The latter will more than likely prove to be true, as Countrywide, along with several other lenders, misled investors and borrowers through insidious, vague and fraudulent wording in its disclosure forms.

Countrywide also faces probes by the FBI and several states, including the State of California, looking primarily into whether the company employed improper lending practices. TILA violations were rampant during the subprime boom, as many lenders failed to disclose terms that are required through the Truth in Lending Act (i.e. loans that were amortizing negatively).

A Los Angeles Times report showed that, "The SEC began investigating Mozilo in September of 2007 [after the report] detailed his sale of $145 million in Countrywide stock in late 2006 and 2007 via automatic trading plans," (Los Angeles Times, 8/8/08).

Angelo Mozilo has been receiving a lot of negative press since his infamous "reply" to a troubled borrower was dismissed by him as "whining" and "disgusting." Mozilo has yet to comment on this latest matter.

Originally posted at InjuryBoard by Paul Kiesel

Connecticut Attorney General: Countrywide Conned Customers into Loans

Paul Kiesel — Wed, 06 Aug 2008 14:53:56 GMT

Another state is accusing Countrywide Financial of mortgage fraud. Connecticut joined California, Florida and Illinois among the states that have sued Countrywide, which was responsible for one in every six mortgages in 2007, according to the New York Times.

The State of Connecticut is accusing the mortgage giant of steering customers into mortgages they could not afford, and charging excessive legal fees to borrowers in default. Most of these practices were executed through the use of vague language and misinformation on the loans' Truth in Lending disclosure forms (TILA violations, such as not stating that many of the subprime loans Countrywide wrote were negative amortization loans; a violation of the Truth in Lending Act).

Richard Blumenthal, Connecticut's attorney general, said today that, "Countrywide conned customers into loans that were clearly unaffordable and unsustainable, turning the American dream of homeownership into a nightmare."

Connecticut, in the lawsuit that was filed with Hartford Superior Court, is demanding that Countrywide make restitution to affected borrowers, give up improper gains, and rescind, reform or modify all mortgages that broke state laws.

Connecticut's complaint described the lending practices of Countrywide as, "oppressive, unethical, immoral and unscrupulous," (New York Times, 8/7/08).

The Connecticut AG accused Countrywide of inflating borrowers' incomes to qualify them for loans they could not afford and then misleading consumers about loan terms. The latter practice typically occurred through TILA violations on option-ARM loans, like teaser rate payment options (where the monthly mortgage payment only includes paying part of the interest being charged, the remaining interest is compounded monthly resulting in a negative amortization loan; the principal balance is never paid during the teaser rate period).

Bank of America has yet to comment on Connecticut's lawsuit. Bank of America purchased Countrywide for $2.5 billion last month. Analysts have said the bank might face $10 billion or more of future losses or write-downs tied to deteriorating credit and legal bills stemming from lawsuits against Countrywide.

Originally posted at InjuryBoard by Paul Kiesel

Fed Misses Major Lending Abuse Issue: Mortgage Brokers Steering Borrowers into Bad Loans for Fat Fees

Paul Kiesel — Thu, 24 Jul 2008 21:00:27 GMT

In 2007, mortgage brokers and loan officers received huge payouts by lenders like Countrywide, Bear Stearns and IndyMac to put unsuspecting borrowers into expensive loans (supbrime, ALT-A., etc.), according to the Department of Housing and Urban Development (HUD).

Howell Jackson, a professor at Harvard Law School, testified before Congress recently and said that he thinks the Fed has overlooked the problem and that it remains a "serious problem." Ultimately, Mr. Jackson believes that that cost of borrowing for everybody goes up, because of the losses that stem from subprime loans that were issued and continue to be issued due to incentive-laced compensation for the mortgage broker and the high default rate of the loans.

The HUB estimates that this type of lending practice cost borrowers $16 billion in 2007 alone.

The Yield Spread Premium (YSP)

The YSP is the difference between the lowest interest rate that a borrower qualifies and the actual rate that a lender charges. The greater the YSP, the more a loan originator, like Countrywide, earns and that pushes the mortgage broker, based on avarice and compensation, to steer the borrower into a bad loan.

CNNMoney.com provides an excellent example of this YSP problem:

Say a couple buys a new house and qualifies for a 6.5% rate on a 30-year fixed mortgage. A greedy broker or loan officer might put the couple in a 7% loan so that he earns a bigger payday, or even a 7.25% loan. Loan originators usually earn about 1% of the loan value for every extra quarter point of interest they charge borrowers. So if they put naive home buyers into high-cost loans, such as hybrid adjustable rate mortgages or option arms, they could make 5% or more on a loan.

Due to the clever packaging of junk loans, like option-ARM loans and other teaser rate payment loans, and selling them off to investors (CDOs), the above situation occurred more often than it should have over the last few years, as mortgage brokers and loan originators were able to deceive borrowers into negative amortization loans via a mutlifarious of TILA violations.

The Fed says it plans to address this problem. However, a spokesman for the Fed has only said that it will focus its efforts on improving fee disclosures, which is a start, but still leaves the borrower at a disadvantage in determining the YSP.

A spokesman for the HUD, Brian Sullivan, said that "mortgage rules are 30 years old and don't reflect the way people refinance their homes today." This is true. Teaser rate payment options weren't an option that long ago.

Even though the Fed announced new rules last week to help curb mortgage fraud, if further legislation isn't introduced TILA violations and other mortgage fraud, through deceptively written loans, could emerge again.

Originally posted at InjuryBoard by Paul Kiesel

San Diego Wants to be a Foreclosure Sanctuary, Sues Bank of America Amid Congress Passing Housing Bill

Paul Kiesel — Wed, 23 Jul 2008 21:07:59 GMT

The Southern California housing market has been crushed over the last seven months, as foreclosure rates continue to soar and home prices further depreciate.

The City of San Diego, in an effort to curb the foreclosure problem, has filed a lawsuit against Bank of America and its Countrywide unit. San Diego City Attorney Michael Aguirre said that he hopes to prevent as many foreclosures as possible through this lawsuit and to turn San Diego into a "foreclosure sanctuary."

Countrywide has been accused of writing illegal mortgages, particularly when it came to subprime mortgages and option-ARMs (TILA violations), as the FBI is currently investigating them, IndyMac, and 19 other banks for fraudulent lending practices.

So far this year, 20,000 homes in San Diego County have been lost to foreclosure as borrowers fail to keep up with mortgage payments. This number could easily double by the end of the year.

Mr. Aguirre's lawsuit names four current and former Countrywide officers, including former CEO Angelo Mozilo. The suit alleges that they personally profited from selling shares of the lender's stock while knowing its subprime loans (with TILA violations) didn't comply with company policies (because they were illegal).

According to Yahoo!, Mr. Aguirre said, "The Countrywide executives who originated these subprime loans were engaged in a massive fraud on homeowners, borrowers and investors [. . .] They enriched themselves by over $1 billion [. . .] We have the big stick of being found in violation of the law and the carrot of taking something that is a nonperforming asset, that all these houses are, and making it a performing asset by keeping the families in it," (Yahoo! Finance, 7/23/08).

Bank of America, as they have ubiquitously done in regards to other lawsuits filed against them, made no comment.

Housing Bill

Also, Congress passed their version of the Housing Bill today, which now moves onto the Senate for a vote. Bush has promised not to veto the bill, even though last week he said he would if it included government grants allowing state and local agencies to purchase foreclosed homes (a $4 billion provision).

The provision is still in the bill, and it is likely that Bush chose to back off of his veto threat, due to the fact that a video was leaked on the web showing the president making fun of the housing situation and Wall Street. If not, then the timing is just that much more coincidental, since the president was unequivocal in his remarks on the housing bill just a few weeks ago, and yesterday afternoon, when he guaranteed to veto the bill, if it remained unchanged.

Originally posted at InjuryBoard by Paul Kiesel

California, Jerry Brown Goes After Countrywide

Paul Kiesel — Fri, 18 Jul 2008 19:57:31 GMT

Countrywide Financial Corp. was accused in a lawsuit, filed by California officials, of making risky loans to people who couldn't afford them. One in five mortgages went bad because of these insidious lending practices alleged in the complaint.

In one instance, an adjustable-rate mortgage (ARM) was approved for an 85-year-old disabled veteran with a poor credit history. The loan was in default within six months.

California Attorney General Jerry Brown said of Countrywide in a statement today that, "These shocking new details provide further evidence of Countrywide's dangerous lending practices, which included ignoring borrowers' low credit scores and rewarding employees for selling risky loans," (Bloomberg News, 7/17/08).

The lawsuit accuses Countrywide of paying loan officers commissions for selling loans with higher rates and fees than consumers' credit scores qualified them for, and ignoring scores, debt ratios and minimal down payments that ultimately compromised the mortgages.

Countrywide is one of many lenders that allowed for mortgage fraud to take place throughout the subprime boom -- in fact, that is one of the main reasons for how the subprime bubble was ble to grow so large. Like IndyMac and Bear Stearns, Countrywide wrote their loans in a misleading way; this was done through TILA violations and in many cases the TILA disclosure forms, at least when the loan was an option-ARM or a teaser rate payment loan (paying only part of the interest), did not reveal that the loan was a negative amortizing loan.

Countrywide was just purchased by Bank of America. Bank of America shares have been hit hard since announcing the acquisition of and acquiring Countrywide, falling from almost $50 a share to as low as $20 a share last week. This hit to their stock is likely due to the amount of bad loans that Countrywide wrote throughout the subprime boom (again, 21% of their loans have gone bad, and, unfortunately, many more loans will continue to default).

Originally posted at InjuryBoard by Paul Kiesel