Connecticut Attorney General's Office
Attorney General Announces Countrywide Paying $1.27 Million To State Residents Who Lost Homes
February 15, 2010
Countrywide on Friday mailed each eligible Connecticut resident a check for $3,452.54 under a nationwide agreement Blumenthal's office helped negotiate.
The payments are part of a nationwide $113 million settlement.
"My office fought for and won compensation -- more than $3,400 per homeowner -- to consumers duped by Countrywide's former management," Blumenthal said. "This money helps consumers who lost their homes begin rebuilding finances mauled by Countrywide's cruel mortgage cons.
"Countrywide's previous management turned the American Dream of home ownership into a nightmare by luring homebuyers into mortgages they could not afford, forcing foreclosure and bankruptcy. The company's traps and tricks included bait-and-switch payment terms, encouraging consumers to take out loans they obviously could not afford and excessive and unjustified fees. Countrywide's new owners did the right thing, heeding our demand that they compensate consumers who were burnt and bamboozled.
"I will continue fighting for comprehensive reform vital to preventing future abuses. The federal Consumer Financial Protection Agency proposed by Congress is essential to protecting consumers from predatory practices that nearly cost these consumers their homes and almost wrecked the nation's economy. Congress must overcome shameful and shameless banking industry resistance to this crucial watchdog."
Blumenthal alleged that Countrywide's abuses included:
- Encouraging consumers to take out loans the company knew or should have known they could not afford;
- Improperly inflating consumers' incomes to qualify them for loans they otherwise could not have received;
- Providing loans with different and more expensive terms than consumers were promised;
- Pressuring consumers into mortgages with temporary interest only payment options when the company knew or should have known they could not afford the higher payments that would come due later;
- Providing variable rate loans to consumers with the assurance they could refinance before interest rates reset, only to later refuse to do so;
- Sending at least one consumer rejected for a home equity loan at one Countrywide office to another company branch where the loan request was approved;
- Demanding Connecticut consumers facing foreclosure pay excessive and inaccurate legal fees in order to reinstate their loans;
- Promising to help homeowners "in financial difficulty to establish suitable payment plans," but instead demanding loan modifications and repayment plans that were unsustainable, unaffordable or unsuitable.
To qualify for compensation, consumers' loans must have been foreclosed on or in serious default and their first mortgage payments must have been due between January 1, 2004 and December 31, 2007. They must have lived in the dwelling, made six or fewer payments and have been foreclosed on or at least 120 days delinquent as of October 6, 2008.