Countrywide Under Scrutiny
By Kurt O'Keefe, Detroit Consumer Attorney on Feb 4, 2008 in Interest and Fees
Most of the horses are out of the barn, but some of the bad guys are being chased.
As the sub-prime crisis unravels, the biggest player, Countrywide, is getting much of the attention.
Sometimes the media focus on the borrower, why did people sign up for a mortgage they could not afford?
In Illinois, one of the answers, according to the Illinois Attorney General’s office, is “We sued them basically for getting borrowers into loans they couldn’t afford.”
This refers to a suit against a mortgage broker, which Countrywide, and most mortgage lenders, relied on to bring in customers.
If it seems to good to be true, it usually is. One of the necessary steps creating this mess was looking the other way, extending sub-prime mortgages to people who had to end up being foreclosed. The Countrywide’s of the world made tens of thousands of loans to people they never checked out, outsourcing that to brokers, and even then, not requiring verification of income or anything else.
More was needed to get to where we are. First, Greenspan pumped up the bubble, so the easy money was there.
Even after the Countrywide’s made the bad loans, someone had to buy them.
More who should have known better had to look the other way, and the accountants, auditors and others, who should have been blowing the whistle, are on the wrong end of lawsuits.
New York City and State, concerned about pension investments, which should not, and would not, have been made, without these people signing off on the soundness of the securities, backed by the garbage mortgages, have added Defendants to their class action suit.
Of course, I have blogged on the causes of the sub-prime crisis repeatedly, and look forward to the addition of the rating agencies, the Fitches, S & Ps, and Moodys, to the mix, so they can explain how they rated this stuff almost as high as government bonds.
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