2 States Sue Countrywide
As Countrywide Financial Corp. shareholders voted on whether to approved Bank of America Corp.'s proposed acquisition of the company, attorneys general in California and Illinois sued the lender. Meanwhile, Washington's governor also announced actions against the lender.
The Calabasas, Calif.-based company announced today that 69 percent its stockholders approved BoA's acquisition of the company at a special stockholders meeting. The deal is slated to close next Tuesday.
But the two lawsuits announced today indicate the deal will include some baggage.
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Mass. AG Sues Option One
The state of Massachusetts is suing defunct Option One Mortgage Corp. and its parent over allegations it placed minority borrowers in high-cost loans and contributed to the state's foreclosure crisis. The company was criticized for encouraging networking among minority groups, paying yield-spread premiums and paying volume bonuses.
Baltimore Blames Wells for Foreclosure Woes
A lawsuit filed against Wells Fargo Bank, N.A., by the City of Baltimore alleges the lender is responsible for "tens of millions of dollars" in lost tax revenues to the city because of a few hundred foreclosures during the past seven years. In its request for a dismissal, Wells countered that the city itself was responsible for nearly 20,000 foreclosures during that same period.
Mortgage Technology Activity
Mortgage technology continues to expand as innovators launch new offerings. Among the latest activity are new services that help prevent mortgage fraud, predatory lending and bad appraisals.
State Seeks $20 Million from Broker
California's attorney general has arrested several individuals and shut down businesses connected to a Los Angeles mortgage broker, who along with his sister and his mother, has been accused of bait-and-switch tactics and fraud on thousands of loans. The state is seeking $20 million in penalties and restitution.
Baltimore v. Wells Fargo
The city of Baltimore last week filed a lawsuit against Wells Fargo in federal trial court, charging the ubiquitous lender with targeting Baltimore's minority neighborhoods with mortgage loans that are unfair and discriminatory. But the company denied the charges, saying that it prices loans based on risk, not race.
Lenders Losing Lawsuits
Borrowers appear to be winning a number of lawsuits filed against mortgage companies, an analysis of previously covered litigation by MortgageDaily.com indicated. Two of the cases are seeking to stave off foreclosures while another is targeting fees charged by state regulated lenders in Maryland. One lawsuit accuses several lenders of steering black borrowers into higher cost loans.
Fed Proposes Sweeping TIL Changes
The Federal Reserve Board has proposed sweeping changes to rules governing high-cost loans and prime loans. Among the changes are a ban on stated income and stated asset programs, mandated escrow accounts and limitations on yield spread premiums paid to mortgage brokers.
Lawsuit Alleges Predatory Servicing
In a lawsuit filed this week, Bear Stearns Companies and its servicing subsidiary are accused of charging frivolous fees, losing payments and mismanaging escrow accounts on loans with nonprime minority borrowers.
Full House Passes H.R. 3915
The full U.S. House of Representatives passed H.R. 3915 today. Those happy with its passage include mortgage brokers -- who successfully lobbied for the preservation of yield spread premiums. But the president and mortgage bankers oppose it.
HR 3915 Approved by Committee
HR 3915 advanced through the House Committee on Financial Services. The proposed legislation would limit yield spread premiums and push more loans into the burdensome, high cost category.
