US mortgage giant Countrywide was sued for unfair lending practices on Wednesday by the states of California and Illinois, according to dpa. The lawsuits claimed that the company lured borrowers into risky loans they couldn't afford and caused thousands of people to lose their homes and life savings when they couldn't make their payments. The lawsuits coincided with the approval by Countrywide's shareholders of the company's 3-billion-dollar buyout by Bank of America. "Countrywide exploited the American dream of home ownership and then sold its mortgages for huge profits on the secondary market," California Attorney General Jerry Brown said in a statement. "Countrywide was, in essence, a mass-production loan factory, producing ever- increasing streams of debt without regard for borrowers." Many of the loans offered low introductory rates before rising steeply. The lawsuit claims that Countrywide misled customers, obscured the potential risks and falsely told borrowers they would be able to refinance before the interest rate rose, Brown claimed. In the lawsuit filed in the Los Angeles Superior Court, Brown charged that Countrywide "viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers' long-term ability to afford them and to sustain home ownership." The lawsuit also named as defendants Countrywide Chairman and CEO Angelo Mozilo and David Sambol, the lender's chief financial officer. Brown seeks restitution for borrowers, civil penalties of as much as $2,500 per violation and a court order halting the practices. In the Illinois litigation, Attorney General Lisa Madigan asked the court to order Countrywide to pay restitution to all of the company's consumers who lost their homes or loans, and to mandate a 90-day review for loans that are in or near foreclosure to determine affordable options.
