Connecticut has become the latest U.S. state to sue former lending giant Countrywide Financial, following in the footsteps of Florida, California, and Illinois.
State Attorney General Richard Blumenthal announced today that his office was suing Countrywide and related companies for alleged deceptive lending.
Additionally, the suit claims that Countrywide pushed consumers into unaffordable loan workouts, and charged homeowners in default unjustified and hefty legal fees.
“Countrywide conned customers into loans that were clearly unaffordable and unsustainable, turning the American Dream of homeownership into a nightmare,” said Blumenthal.
“When consumers defaulted, the company bullied them into workouts doomed to fail. Countrywide crammed unconscionable legal fees into renegotiated loans, digging consumers deeper into debt. The company broke promises that homeowners could refinance, condemning them to hopelessly unaffordable loans.”
Blumenthal noted that the mortgage lender violated state consumer protection and banking laws by encouraging borrowers to take out unaffordable loans, inflating borrower income, playing down negative aspects of the types of loans they sold, and promising borrowers they could refinance once the adjustable term expired.
In one case, a borrower’s home equity loan application was allegedly rejected at one Countrywide branch, but subsequently approved at another.
The lawsuit seeks civil penalties of up to $100,000 per violation of state banking laws and $5,000 per consumer violation, the surrender of ill-gotten gains and an order to cease its illegal practices.