Sued

Countrywide seeks to combine state lawsuits in California

Home mortgage lender Countrywide Financial Corp., sued by states and consumers for alleged deceptive business practices, asked a federal judicial panel to consolidate six of those cases in one U.S. court in Los Angeles.

The lender and Bank of America Corp., which acquired it this year for $2.5 billion, asked the U.S. Judicial Panel on Multidistrict Litigation to place cases filed by Illinois Attorney General Lisa Madigan, her California counterpart, Jerry Brown, and the other suits before one judge, arguing they share common questions of law and fact.

The cases “are based on the same core allegations,” and seek similar relief, the lender's lawyers said in a Chicago federal court filing on Aug. 14 asking for the Illinois case to be delayed until the multidistrict panel rules.

Madigan and Brown sued Calabasas, California-based Countrywide on June 25. The cases, initially filed in state courts in Chicago and Los Angeles, accused the lender of using deceptive practices including low introductory or "teaser" rates to entice borrowers to take loans where payments later grew to amounts homeowners couldn't afford to pay.

LegalNewsline.com, an online news service that focuses on state attorneys general, reported yesterday that Brown said he was in "ongoing and intensive'' talks with Bank of America executives. Brown's spokeswoman, Christine Gasparac, declined to comment.

The California and Illinois suits ask for unspecified restitution for homeowners. California also seeks civil fines of as much as $2,500 for each violation of state laws banning unfair business practices and false advertising. Bank of America is based in Charlotte, North Carolina.

‘Reviewing the Action’

“We're reviewing the motion and we will be responding,” Robyn Ziegler, a spokeswoman for Madigan, said in a phone interview.

Countrywide lawyers asked the multidistrict panel to place the cases before U.S. District Judge Stephen Wilson in Los Angeles, who already has Brown's suit and a similar case before him, according to the company's Chicago filing.

If the panel grants the request, Wilson would supervise a unified process for exchanging documents and taking depositions before the cases are returned to their original jurisdictions for trial.

(Published by Bloomberg - august 18, 2008)