Jerry Brown says Countrywide used “shocking”deceptive lending practices
July 17th, 2008, 12:51 pm · 13 Comments · posted by John Gittelsohn
UPDATED: With response from Bank of America.
Jerry Brown, California’s attorney general, has added new accusations to a law suit against Countrywide Financial, alleging the lender’s deceptive business practices included ignoring its internal underwriting guidelines and rewarding employees for selling risky home loans.
“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,” Attorney General Brown said. “In one case the company approved an adjustable rate mortgage to an 85-year-old disabled veteran with such a low credit score and high debt that he defaulted in less than six months.” (Brown pictured in file photo from AP’s Jeff Chiu)
The new allegations are part of an amended complaint to a lawsuit Brown filed June 20 against the lender, which was taken over this month by Bank of America.
Bank of America spokesman Dan Frahm said his company does not dispute the numbers in Brown’s latest allegations, but he said the problems reported represent a minority of Countrywide’s portfolio– about 158,000 of 950,000 loans owned and originated by the company. Countrywide services a total 9 million loans.
“The percent of delinquencies and foreclosures in that part of the portfolio is much higher than other loans,” Frahm said of the Countrywide loans under attack.
Frahm added that BofA is cooperating with Brown’s investigation and expects to correct any potential systemic problems now that it owns Countrywide.
To see the Attorney General’s announcement, CLICK HERE.
To see the Attorney General’s amended complaint, CLICK HERE.
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July 17th, 2008 at 1:53 pm
Wasn’t his sister a member of the CFC board? Why didn’t she do anything about it?
July 17th, 2008 at 1:58 pm
His sister works for the evil Goldman Sachs, therefore she is evil herself. He might want to investigate her activities as well in the public financing arena… all those auction rate securities and swaption deals that have been exploding in municpalities’ faces.
July 17th, 2008 at 2:21 pm
These people signed…Let them pay.
July 17th, 2008 at 3:03 pm
Of course he knew rates were not really 1%, Hey we all knew it…..even the subprimers knew it!!
This isn’t about discovery of evidence………What it is all about is a little game we used to play called….”pin the tail on the donkey”.
Why not jump on Countrywide now………..afterall, they don’t have any money…….and you know damn well Brown is now going after “San Francisco” based Bank of America……could it just be political expiency???? duh!
July 17th, 2008 at 3:05 pm
Correction……….NOT going after.
July 17th, 2008 at 4:13 pm
BoA is actually headquartered in Charlotte, NC. Started off as a San Francisco bank, though.
July 17th, 2008 at 4:23 pm
Cathy, HQ yes, but began as Bank of Italy by the founders of now Bofa, and are deeply entrenched in San Francisco and California politics….
P.S. Countrywide was “based in Calabasas, California
July 17th, 2008 at 4:46 pm
In 1997, BankAmerica lent D. E. Shaw & Co., a large hedge fund, $1.4bn so that the hedge fund would run various businesses for the bank. However, D.E. Shaw suffered significant loss after 1998 Russia bond default. BankAmerica was later acquired by NationsBank that year.
The purchase of BankAmerica Corp. by the NationsBank Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of BankAmerica Corporation by NationsBank, the deal was structured as merger with NationsBank renamed to Bank of America Corporation, and Bank of America NT&SA, changing its name to Bank of America, N.A. as the remaining legal bank entity. The bank still operates under Federal Charter 13044 which was granted to Giannini’s Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under NationsBank, not BankAmerica
July 17th, 2008 at 4:51 pm
I really hope this doesn’t come as a surprise to anyone. However, I really think that you can’t place the blame entirely on the lender if the borrower signed documents themselves. Forged documents, which are also prevalent, are an entirely different matter.
July 17th, 2008 at 5:02 pm
He knew rates were not 1%, the sub primers knew it was not 1%….the adversting regulators that allowed the advertisements knew it was not 1%…..the whole fricken world knew rates were not 1%……also what part of pay “OPTION” do you think is causing the misunderstanding?…
July 17th, 2008 at 5:59 pm
Jerry (lets all go to outer space) Brown is a bona fide nut job. Unfreaking real that the brain dead people in Cali elected him to Attorney General. He was a real winner as mayor of Oakland, (crime rate through the roof). Anybody remember Rose Bird. This guy could do a reality TV show and call it “Scmuck in the City”.
July 17th, 2008 at 6:33 pm
Actually, the first branch of what became Bank of America was in San Jose, not San Francisco. It was located on Santa Clara Street a few blocks off First, San Jose’s main street. I had the pleasure of being involved in the leasing of that building to the Perot for President committee in 1992. A.P. Gianini was a beloved figure in California’s farming community because he gave credit to farmers and orchardists in hard times when other banks were foreclosing left and right on everything they could.
July 18th, 2008 at 11:23 am
Ray, that’s a common rumor, but actually the first bank (main office) not a branch was in San Francisco. The Founder Amadeo Pietro Gianni opened Bank of Italy 10-17-1904 in a former saloon in San Francisco. The bank survived the San Francisco earthquake and fires of 1906. He was the first bank to start lending to business for the rebuilding on the city.