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Mortgage lender faces lawsuit

The biggest American sub-prime mortgage lender, Countrywide Financial, was slapped with a prosecution for unethical business practices on Wednesday, just hours before its shareholders were due to vote the company out of existence.

The Attorney-General of Illinois, Lisa Madigan, announced she was filing a civil action against Countrywide for deceitful conduct and lax standards in the way that it provided sub-prime mortgages to customers.

Countrywide is accused of using misleading marketing to sell mortgages packed with hidden fees and risky terms as part of a “single-minded quest” to dominate the U.S. home-loans industry.

“Countrywide used egregiously unfair and deceptive lending practices to steer borrowers into loans that were destined to fail,” said Madigan. The suit, which is the first action brought against Countrywide by a public prosecutor, has been brought on behalf of thousands of people in the Chicago area who are in danger of losing their homes.

Some 35 per cent of Countrywide’s sub-prime mortgages are in default. — © Guardian Newspapers Limited, 2008

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