Governor Rell and Banking Commissioner Pitkin
Announce Settlement with Countrywide Home Loans, Inc.
Company pays $401,000 fine and gives $100,000 in homeowner assistance
April 11, 2007
Governor M. Jodi Rell and Banking Commissioner Howard F. Pitkin announced today a settlement agreement between the State of Connecticut and Countrywide Home Loans, Inc. and Countrywide Home Loans, Inc. d/b/a America’s Wholesale Lender (collectively “Countywide”). The settlement results in a civil penalty of $401,750 and a contribution to NeighborWorks in the amount of $100,000 to be used for homeownership assistance to Connecticut borrowers.
The Consumer Credit Division of the Department of Banking conducted an examination and investigation into the activities of Countrywide to determine if it had violated any provisions of the Connecticut General Statutes. As a result of this investigation, the agency has determined that from October 1, 2001 through August 31, 2005, Countrywide Home Loans, Inc., when making at least 362 first mortgage loans, imposed prepaid finance charges that exceeded in the aggregate the greater of five percent of the principal loan amount or $2,000, and that the company employed or retained at least 147 originators without first registering such originators, as required by state law.
The Department also alleges that the company, when making at least 111 first mortgage loans as America’s Wholesale Lender, imposed prepaid finance charges that exceeded in the aggregate the greater of five percent of the principal loan amount or $2,000. These actions constitute violations of the Connecticut General Statutes.
As a result of the Department of Banking’s investigation, Countrywide has taken steps to remedy the situation which include the following:
- All of the 473 overcharged loan accounts were refunded the total of the excess prepaid finance charge paid, as well as interest collected on the overcharges and an amount for lost use of the funds paid.
- Countrywide has instituted monthly exception reports to identify unregistered loan originators.
- Countrywide has instituted procedures to prohibit unregistered loan originators from receiving compensation.
- Countrywide has conducted training with regional and branch personnel to review the Connecticut prepaid finance worksheet.
- Countrywide Financial Corporation made a contribution to NeighborWorks in the amount of $100,000 pursuant to the Contribution Agreement.
“I am pleased that the work of the Banking Department will result in restitution to Connecticut citizens harmed by business practices identified by the agency’s Consumer Credit Division,” Governor Rell said. “It is important for our regulatory agencies to be vigilant in protecting the interests of our consumers.”
"Countrywide has worked hard to repay and make whole any and all harmed individuals,” Commissioner Pitkin commented. “We believe that the company has tried to make amends, and the contribution to NeighborWorks is a step in the right direction. Finally, I would like to commend the Department’s Consumer Credit Division for their investigation which resulted in restitution to Connecticut citizens.”