State sues Countrywide over lending practices

by Dustin Grove (grove@wsbt.com)

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Indiana has sued Countrywide Financial Corp., becoming the latest state to take the mortgage lender to court over its lending practices. (WSBT file photo)

Story Created: Aug 25, 2008 at 4:50 PM EST

Story Updated: Aug 27, 2008 at 11:02 PM EST

Indiana has joined a list of states now suing Countrywide, the nation's largest mortgage lender.

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At a news conference Monday morning, Attorney General Steve Carter announced the lawsuit, claiming the California-based company was deceptive or misleading about the terms of its loans with some borrowers, including prepayment penalties and the interest rate on adjustable rate mortgages.

“When you walk away from your loan closing believing you’ve got a fixed rate of 1.75 percent for five years, and then that changes in three months, that’s pretty dramatic,” said Carter. He urged Countrywide borrowers to check their loan documents and make sure what’s there is what they signed up for.

“Citizens have provided information on income of $3,000 per month but those loan documents were then altered to allow them to qualify for a larger mortgage by moving that up to $14,000,” said Carter. “That gets somebody into a larger mortgage a bigger house but ultimately they're going to have trouble repaying that size of loan based upon their true level of income.”

Indiana is the fifth state to file suit against Countrywide. Indiana’s suit was filed on behalf of three plaintiffs from central and northeast Indiana.

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