[Posted by Kevin Fanning]
* Lisa Madigan has been getting a lot of press over a new lawsuit against Countrywide Financial. The suit shows how Illinois residents have suffered, and has attracted national attention as an overall critique of companies who have helped to spur the mortgage crisis:
The lawsuit offers a comprehensive look at how the company allegedly ripped off homeowners by pushing them into loans they couldn’t afford while not telling them what they were getting into.
One Countrywide customer in Illinois, a 64-year-old widow on a fixed income, was paying about $300 a month on her mortgage. After Countrywide refinanced her loan, her payments shot up to $800 a month, the lawsuit says.
Nor was Countrywide straightforward about loan terms, the lawsuit alleges. Details were in tiny type, and consumers who actually read footnotes were at times referred to footnotes of footnotes.
Madigan says Countrywide should pay back borrowers who lost their homes, and she’s also asking a court for a temporary stay on new foreclosures.
Bethany Jager has more…
The Chicago area had the most subprime loans of any metropolitan area in the country, according to a 2006 study by the Chicago Reporter, an investigative magazine. And Countrywide held more of those loans than any other lender. The Chicago area also has one of the highest foreclosure rates in the country.
The attorney general also says her office has received more than 200 complaints about the company since 2005.
In early 2007, the company issued nearly $8 billion in risky subprime loans, which generally are given to borrowers with poorer credit histories and lower incomes than those given standard loans.
* You can view the Attorney General’s complaint here.
Whatever the results of the suit are, I’m sure that Madigan will continue to receive accolades from angry Illinoisans for trying to hold companies accountable for the mortgage mess.