California joins Illinois in deciding to go after subprime lender Countrywide for less than savory lending practices. Note both suits were filed the day shareholdeers are to approve the increasingly dubious deal (although Bloomberg tells us that tax breaks resulting from Countrywide losses will pay for the purchase price. Yes, but will the also be enough to cover damages from successful litigation?). The suit also names Angelo Mozilo and president David Sambol as defendants.
From the Wall Street Journal:
California’s attorney general has filed a civil lawsuit alleging that Countrywide Financial Corp. engaged in deceptive advertising and unfair competition by pushing borrowers into risky loans. The 46-page complaint also names Countrywide chairman Angelo Mozilo and the company’s president David Sambol.
“Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” California attorney general Edmund G. Brown said in a statement.
The lawsuit alleges that Countrywide “viewed borrowers as nothing more than the means for producing more loans” and originated loans “with little or no regard to borrowers’ long-term ability to afford them and to sustain homeownership.” These practices “were created and maintained with the knowledge, approval and ratification of” Mr. Mozilo and Mr. Sambol, it alleges.
Here is the text of the complaint.