The Connecticut Attorney General Richard Blumenthal Wednesday became the latest on a growing list of prosecutors to sue Countrywide Financial Corp. for a variety of deceptive lending practices.
In addition to Blumenthal, the attorneys general of California, Illinois, Florida, the governor of Washington and San Diego City Attorney Michael Aguirre have filed suits in recent months against the subprime mortgage giant, which is now owned by Bank of America.
The Connecticut suit is similar to one filed by Aguirre last month in that it asks the court to issue an order “rescinding, reforming or modifying” all mortgage loans issued by Countrywide that violate the state’s banking and consumer laws.
Aguirre’s suit asks the court to stop foreclosure proceedings on delinquent borrowers with so-called exotic loans that have a specific set of characteristics. The characteristics include mortgages with a 100 percent loan-value ratio, a teaser rate that is at least 3 percent less than the rate it would eventually reset to and a payment that would push the borrower’s debt-to-income ratio over 50 percent.
Blumenthal had this to say about his suit in Connecticut:
“Countrywide stacked the deck and the deal against its customers: Our goal is to un-stack the deck — and undo the deals — restoring fairness and fiscal sense to mortgages. I will fight for restitution — money back to homeowners used and abused by Countrywide — as well as fines and forfeitures to the state. Our lawsuit seeks to invalidate loans that violate state law, allowing consumers to shed illegal, unreasonable fees and conditions that leave them at the precipice of foreclosure. We must vigorously fight predatory lending practices that trap consumers on a debt treadmill.”