Mortgage

State sues mortgage company Countrywide

Indiana is joining other states in taking legal action against mortgage giant Countrywide Home Loans Inc. for allegedly deceiving borrowers into taking on costly and high-risk loans.

Attorney General Steve Carter announced the suit Sunday. It was filed in Steuben County Court.

In the lawsuit, Carter says Countrywide, the nation's largest mortgage lender, engaged in "deceiving and misleading practices."

"These unfair lending practices may have harmed thousands of people and, in turn, negatively affected our communities and neighborhoods throughout the state," Carter said in a news release.

Carter alleges that Countrywide provided financial incentives for brokers to sell potentially risky loans, omitted or misleadingly presented loan terms, and misled borrowers about prepayment penalties or the time in which they would apply.

He claimed that the company also inflated or fabricated borrowers' incomes so they could be approved for bigger loans.

The state is asking that the court order Countrywide to end those practices and void prepayment penalties and loans that originated from them.

Indiana also seeks civil penalties of as much as $15,500 per violation, investigative costs and restitution for consumers.

Four other states -- California, Connecticut, Florida and Illinois -- have taken action against Countrywide this year for questionable practices. Washington and New Mexico have taken separate actions.

(Published by Indystar - august 25, 2008)