More Reasons to Hate Countrywide, Angelo Mozilo
The latest issue of Barron’s cites a particularly juicy lawsuit recently filed by Countrywide Home Loans (now part of Bank of America) against Mortgage Guarantee Insurance Corp. over the mortgage insurer’s refusal to pay claims on some of Countrywide’s toxic loans.
MGIC’s investigation of Countrywide’s dirty lending practices, which is attached to a court motion, contains some classic tales of the shenanigans that led to the housing bust.
There’s the part-time housekeeper in Chicago who got a $339,000 Countrywide mortgage after a friend who owned an auto-body shop helped her craft a document stating she was an employee who made $6,833 a month. (She really made about $300 a week.) Not only did the housekeeper never show up at the closing because she had returned to Poland, but the new house was really for her sister and brother-in-law, according to the MGIC complaint.
There’s also a California man who earned $1,100 a month as a milker for the Jose Silveria Dairy, but was still able to get a $350,000 mortgage from Countrywide after stating on his application that he made $10,500 per month as a “dairy foreman.” Not surprisingly, he defaulted on the loan.
Another California man, who got a $205,000 mortgage from Countrywide by lying about his job and inflating his income, had actually purchased the house for the Countrywide loan officer, who planned to rent it out, the MGIC snoops found.
The list goes on and on and includes tales of people saying they worked for fake companies, fraudulent tax returns, and references to personal bank accounts that never existed. (Read the full complaint below)
The investigations can be found in MGIC’s complaint to the American Arbitration Association. Interestingly, the application states that Countrywide’s mortgages have defaulted at three times the rate of other lenders that MGIC insured.
