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Countrywide Financial Corporation

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Countrywide Financial Corporation was an American lender providing single-family home mortgages through its Countrywide Bank and Countrywide Home Loans subsidiaries. Countrywide was the country's largest mortgage lender.

On July 1, 2008, Bank of America Corporation completed its purchase of Countrywide.

It now operates as Bank of America Home Loans.

Financial crisis and the bailout

Role in the crisis

Predatory lender

Countrywide was a classic predatory lender. An example of Countrywide's tactics are available in the March, 2009 report "How Wall Street and Washington Betrayed America" from the Consumer Education Foundation:[1]

In one lawsuit, Albert Zacholl, a 74-year-old man living in Southern California, alleges that Countrywide and a pair of mortgage brokers “cold-called and aggressively baited” him. They promised him $30,000 cash, a mortgage that would replace his previous mortgage (which was leaving him owing more each month) and a monthly payment that would not exceed $1,700. Zacholl told the brokers that his income consisted of a pension of $350 a month and Social Security payments of $958, and that with help from his son, he could afford a mortgage up to $1,700. According to the lawsuit, the broker falsified his loan application by putting down an income of $7,000 a month, and then arranged for a high-interest mortgage that required him to pay more than $3,000 a month (and failed to deliver the $30,000 cash payment). The motivation for the scam, according to the lawsuit, was to collect $13,000 in fees. In court papers, the Center for Responsible Lending reports, Countrywide responded that Zacholl “consented to the terms of the transaction” and that any problems were the result of his own “negligence and carelessness.”

A 2007 NY Times article detailing Countrywide's predatory lending practices reported[2],

... potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.

[. . .] “In terms of being unresponsive to what was happening, to sticking it out the longest, and continuing to justify the garbage they were selling, Countrywide was the worst lender,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “And anytime states tried to pass responsible lending laws, Countrywide was fighting it tooth and nail.”

Political influence

Political contributions and inducements

From Countrywide Mortgage Scandal: In June 2008, Conde Nast's Portfolio magazine began an investigation into whether or not several politicians received favorable mortgage deals from Countrywide Financial Corporation. Portfolio exposed internal company documents and e-mails that show that Sens. Christopher Dodd, (D-Conn.) Kent Conrad (D-ND), and other current and former government officials may have received preferred deals.

Favorable mortgage deals

The following are among prominent politicians who may have received favorable mortgage deals from Countrywide:

Resources

Related SourceWatch articles

References

  1. Page 58, Sold Out - How Wall Street and Washington Betrayed America , Consumer Education Foundation, March, 2009. Retrieved october 10, 2009.
  2. Gretchen Morgenson, Inside the Countrywide Lending Spree, NY Times, August 26, 2007, Retrieved October 10, 2009

External articles