Florida Attorney General Bill McCollum's office said today it has filed a lawsuit against Countrywide Financial for engaging in "deceptive and unfair trade practices."
The suit says Countrywide, one of the nation's largest mortgage companies, knowingly put Florida borrowers into mortgages they couldn't afford or into loans with rates and penalties that were "misleading."
"It is unthinkable that a company would try to take advantage of someone's dream of homeownership," McCollum said in a news release. "Florida homeowners who are trying to protect their homes from foreclosures shouldn't have to worry about their mortgage brokers or lenders unfairly profiting at their expense."
A large number of homeowners who took out these loans are now in foreclosure, the release said. Florida has the second-highest number of foreclosure filings in the nation, according to California-based RealtyTrac.
The lawsuit says Countrywide hid negative effects of "teaser" loans, including rising rates, prepayment penalties and negative amortization. Countrywide paid greater compensation to brokers for loans with higher interest rates and prepayment penalties, the suit said, because it could sell those loans for higher prices on the secondary market.
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