West Virginia's attorney general accuses a national mortgage lender of making risky and unconscionable loans in a lawsuit that's similar to challenges filed in several other states.
In the lawsuit, filed Tuesday, Attorney General Darrell McGraw asks a county circuit judge to stop Countrywide Financial Corp. and four subsidiaries from foreclosing on loans, using “unfair and deceptive” practices and enforcing delinquency judgments.
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McGraw accuses the Calabasas, Calif.-based companies of luring customers with teaser rates that rise to unaffordable rates of up to 18 percent. He also claims the companies enticed customers with no-down payment loans and inflated appraisals.
The lawsuit seeks unspecified restitution for consumers who lost money, a $5,000 civil penalty and legal fees.
Speaking for Charlotte-based Bank of America, which now owns Countrywide, spokeswoman Shirley Norton said she had not seen the complaint and could not comment on it.
“We are working hard to combine our two companies, and are confident we will be recognized as a leader in responsible lending practices,” she said in an e-mail to The Associated Press.
West Virginia's lawsuit is similar to legal challenges in California, Illinois, Florida and Connecticut, and comes at a time when more than 1.4 million Americans are facing foreclosures.
Although West Virginia has one of the lowest foreclosure rates in the country, McGraw says struggling homeowners deserve help.
The West Virginia lawsuit is based on complaints from between 30 and 50 residents, said Deputy Attorney General Kimberly Stitzinger Jones, but she said there are likely more.
Pockets of foreclosures can be found throughout the state, primarily in the Eastern Panhandle and along U.S. 60 from Huntington to White Sulphur Springs.
McGraw's lawsuit notes that foreclosures and delinquencies on subprime adjustable rate mortgages in West Virginia increased from about 37 percent to 51 percent between 2006 and 2007.
Also named as defendants are Countrywide Home Loans Inc., Countrywide Home Loans Servicing LP, Full Spectrum Lending Inc. and Countrywide Financial chief executive officer, Angelo R. Mozilo.