State of California Settles Second Lawsuit with Countrywide, Mozilo

February 3, 2011 No Comments »

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The state of California settled a second lawsuit involving former leading mortgage lender Countrywide and some of its top executives, including Angelo Mozilo and David Sambol.

Attorney General Kamala D. Harris announced a $6.5 million settlement for the predatory lending case against the company, which will go toward a California foreclosure relief fund.

“Our prior settlement with Countrywide provided restitution for foreclosed homeowners and set in motion loan modification programs that have helped tens of thousands of consumers,” Attorney General Harris said in a release on her website.

“We will use the current settlement to help Californians affected by the mortgage crisis by providing grants to agencies that help homeowners facing foreclosure with relocation assistance and providing money to state and local agencies to prosecute mortgage fraud.”

The suit claimed Countrywide lured borrowers with low teaser rates tied to its 1% option arm mortgages, but noted that loan officers working for the company obscured the downsides of the loan program, which was eventually discontinued when acquired by Bank of America.

Countrywide was apparently after a staggering 30 percent market share in the process…

During the 18 months ending in September 2010, 282,000 California homes went into foreclosure, and in the final three months of 2010, 700,000 notices of default were filed in the state.

Since 2008, Countrywide has reportedly extended more than 32,000 loan modifications to California borrowers and has paid $28 million in cash to California residents who lost their homes to foreclosure.

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