Countrywide Agrees to $600 Million Settlement

August 3, 2010 No Comments »

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Former top mortgage lender Countrywide Financial agreed to pay $600 million to settle a number of class-action lawsuits, according to the LA Times.

The suits involve the misleading of Countrywide shareholders, who claimed the company concealed massive losses as the mortgage crisis quickly swept in.

In just months, shares of the company plummeted from around $40 to a few bucks as defaults on risky mortgages like the option arm skyrocketed – the company was eventually sold to Bank of America for a substantial discount in 20o8, resulting in significant losses for shareholders.

U.S. District Judge Mariana Pfaelzer gave preliminary approval to the agreement in Los Angeles, which effectively clears the names of former executives like Angelo Mozilo and CFO Eric Sieracki, at least with respect to shareholders.

The company and its executives are still being investigated by both the SEC and the Justice Department for similar abuses.

The $600 million suit is apparently the largest to come out of the subprime mortgage crisis, appropriately so, as Countrywide was one of the main perpetrators.

Countrywide has previously been sued by the states of California, Colorado, Connecticut, Florida, Illinois, Indiana, Oregon, West Virginia, and the city of San Diego.

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