This morning’s news blip is this little ditty on Countrywide CEO Mozilo:
"The Illinois attorney general’s office, which began an investigation into the business practices of Countrywide Financial Corp. last fall, says it has found enough evidence of wrongdoing that it plans to file a civil suit against the mortgage lender and its chief executive, Angelo Mozilo…
Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans. The 78-page document says the company loosened its underwriting standards, structured loans with "risky features" and engaged in "marketing and sales techniques" that incentivized employees and mortgage brokers to push loans whether or not homeowners had the ability to repay them.
The complaint says the company’s actions were driven by its desire to boost market share and to satisfy Wall Street’s appetite for mortgage securities. "Investor demand and secondary market valuation…became the primary concern when determining what kinds of loans to market and sell and at what price, rather than the consumers’ ability to repay the loans," said the complaint.
The suit demands that any Countrywide loans "originated using ‘unfair and deceptive’ practices
be rescinded or modified in some way, even if Countrywide has to
repurchase the loans. The Attorney General of Illinois is also asking that her office be given 90
days to review any loans that are currently in foreclosure or that are
moving toward foreclosure.
Note that this is a civil, not a criminal, suit.
Separately, Mozilo is facing an SEC probe into his $400 million in sales of Countrywide stock before the price imploded. He is also facing allegations that politically connected "Friends of Angelo" — Senators, Fannie Mae Execs, and others — got favorable "VIP" loan terms from Countrywide.
Man with a Tan needs a plan — and a couple of good lawyers . . .
Illinois Plans to Sue Countrywide, CEO
WSJ, June 25, 2008; Page A12
Illinois to Sue Countrywide
NYT, June 25, 2008
Illinois to sue Countrywide and CEO Mozilo
Reuters, Wed Jun 25, 2008 5:27am BST