The U.S. No. 1 mortgage lender, Countrywide Financial Corp., was
under investigation by California Attorney General Jerry Brown and
the attorney general's office in Illinois, it was reported on
Friday.
Countrywide has acknowledged receiving subpoenas for documents
from California and Illinois but declined to elaborate, citing
company policy, the Los Angeles Times reported.
The company said it was cooperating in the two probes.
A spokesman for Brown told the newspaper he couldn't comment.
The attorney general has said he was taking a broad look into the
lending practices of mortgage bankers and mortgage brokers and what
roles they might have played in the mortgage meltdown crisis.
The investigation in Illinois, first reported in the New York
Times, grew out of a probe into broker One Source Mortgage, which
the state has charged with luring borrowers into loans they could
not afford, according to the report.
Countrywide was the chief provider of these loans -- known as
pay-option mortgages -- which allow a borrower to pay less than the
full interest that comes due each month, sending the loan balance
up.
A former employee of One Source told investigators that the only
Countrywide loan the broker tried to sell was the pay-option type
because the rebates were so huge, Veronica Spicer, an assistant
Illinois attorney general in the consumer protection division, said
in comments reported by the newspaper.
Spicer said her office sent a subpoena for documents to
Countrywide in mid-September.
Mark Belongia, a lawyer for One Source, told The Times the
broker would be vindicated because the nature of the loans was
disclosed carefully to borrowers. "We originated a legal product in
a legal manner," he said.
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(Xinhua News Agency December 15, 2007)
