Connecticut plans to sue Countrywide Financial Corp, once the largest US mortgage lender, alleging that its lending practices violated state consumer protection and banking laws. The lawsuit was announced Wednesday by the office of Richard Blumenthal, the state's attorney general. Further details were not immediately available.
A press conference was set for later Wednesday morning. Countrywide was acquired last month by Bank of America Corp for about $2.5 billion. Bank of America spokeswoman Shirley Norton did not immediately return a call seeking comment. Connecticut would join California, Florida and Illinois among US states that have sued Countrywide, which as recently as last year made one in six US mortgage loans.
Other states have accused Countrywide and its long-time chief executive, Angelo Mozilo, of unfair, deceptive or predatory lending, including the steering of customers into subprime and other home loans they couldn't afford.
Countrywide perhaps has been more closely associated than any other lender with fostering the US housing boom and subsequent crisis by extending risky mortgages, only to suffer later from soaring defaults. Bank of America last month said it expects the Countrywide acquisition to add to profit in 2008, sooner than expected. But analysts have said the bank might face $10 billion or more of future losses or write-downs tied to deteriorating credit, as well as hefty legal bills tied to Countrywide.
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