Countrywide A Target Of Another Lawsuit

[Aug 4, 2008.]

 

The mortgage fallout in the United States is partially to blame for the current state of the global economy. The U.S. dollar is indeed suffering and is having an effect on the economies worldwide. In an effort to find the source of mortgage lenders who may have committed fraud that led to the collapse of the sub prime mortgages several state agencies are filing lawsuits against lenders. The state of Florida has joined California and Illinois filing a suit against Countrywide; a lending organization.

A high number of sub prime mortgage defaults and subsequent foreclosure is seen as suspicious causing many consumer advocacy groups to jump into action. It is believed that Countrywide took part in business practices deemed unscrupulous. The suit depicts Countrywide’s action as taking advantage of sub prime borrowers who would not be able to repay the mortgage loan. What’s more it is shown that Countrywide knowingly approved of high sub prime rates for borrowers who qualified for much lower rates.

This is another action against predatory lending which has been responsible of fraud and unfair business practices. Florida has been one of the hardest hit by foreclosure which may have otherwise been avoided if the sub prime mortgage market was not allowed to deteriorate in such a condition.

One of the allegations states that Countrywide told borrowers that their mortgages were at fixed rate when in fact it was an adjustable rate mortgage subject to chance at a later date. ARMs normally adjust higher then the initial starting rate which is really used to entice the borrower into signing. A fixed rate on the other hand remains constant.

It is unknown whether similar actions will be taken on a global level against lenders who knowingly approved sub prime mortgages even though the signs of fraud or inability to pay were present from the start. What is known is that governments worldwide are going to be on the lookout for predatory lending practice and enact tougher penalties when located.