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California lawsuit says Countrywide Financial steered borrowers to risky loans

California lawsuit says Countrywide Financial steered borrowers to risky loans

Several people who took on home loans from Countrywide Financial Corp. are suing the company, claiming they and other borrowers were steered unnecessarily into risky loans with built-in payment hikes, which ultimately led them to go bankrupt or lose their homes.
The seven plaintiffs filed an amended complaint Friday against the Calabasas-based company and several of its subsidiaries.
Among the allegations are claims that Countrywide tried to "induce as many borrowers as possible into expensive and dangerous subprime loans, because such loans are the most lucrative for Countrywide."
The lawsuit, which was originally filed in U.S. District Court in Los Angeles in September, seeks unspecified damages and class-action status.
A call placed late Friday with Countrywide was not immediately returned.
The mortgage lender has been the target of criticism from consumer groups and legal action from shareholders and others in recent months following the subprime mortgage meltdown this summer.
The company has responded, in part, by working with some community groups dedicated to helping borrowers in trouble avoid foreclosure.
Subprime loans typically have higher interest rates and were generally made to borrowers with past credit problems.
Many borrowers with subprime adjustable-rate mortgages, pay-option loans and others that featured low initial payments and the potential for sharp increases after a few years have defaulted on their loans or ended up in foreclosure.
Countrywide and other lenders have struggled this year because of the spike in defaults and foreclosures.
Countrywide shares were unchanged Friday, closing at $8.77.


Updated : 2021-05-10 11:56 GMT+08:00