Countrywide Class Action Suits: Chink In The Armor

Countrywide Class Action Suits

At one point in my life I was a small logging contractor.   Being a wordsmith,  I wrote our original boilerplate contract.  When we started out,  I was quite proud of the fact that I managed to fit it all onto one page … including room for signatures.  I do this for you,  two,  three,  four,  and you do this for me,  two,  three,  four.   Seven years and a couple of lawsuits later when I finally got out of the business,   our contract had been crafted by an attorney and totaled 8 pages.  I used to joke with my partners that if you ever wanted to see what has gone wrong in a man’s business,  read his standard contract.  So it was with that 8 page contract in mind that I did a little research recently into the class action lawsuits that have been filed against Countrywide.

I found five class action lawsuits against Countrywide.  They are:

Ramos sued Countrywide in 1997 because Ramos,  and the class he represented,  were complaining that Countrywide arbitrarily slammed them into an unwanted insurance policies to boost Countrywide’s profits.

Vincent Alvadorez worked for Countrywide and sued Countrywide  on behalf of his class because he believed it was wrong and fraudulent for Countrywide to demand all of their employees invest 100% of their 401K retirement programs in Countrywide stock and Countrywide investments.

Capital West Appraisals sued Countrywide and Landsafe Appraisers,  a company closely associated with Countrywide for restraint of trade.  Capital West complained that if one didn’t submit to Countrywide’s needs vis a vis appraisals,  you wouldn’t get any appraisal work and since Countrywide was the primary company  writing mortgages in the area (WA State) unless one were put on the list of “approved” appraisers,  one couldn’t find work.   They went on to allege that appraisers on the list unjustly inflated the value of real estate in the areas they worked.

In the Memorandum of Decision Re: Countrywide Financial Corporation Securities Litigation,  a certain class of investors in Countrywide stock sued Countrywide for fraud because they claimed they invested in this class of securities based upon what Countrywide knew to be false financial reports.

Finally,  in January of this year,  the Maine State Retirement Savings sued Countrywide and a whole list of other banks on behalf of their class claiming these banks fraudulently induced the Maine Retirement Savings to invest in a whole series of mortgage backed securities (MBS) claiming the banks knew in advance these classes of securities were destined to be devalued and perhaps even ultimately fail. (ya think?)  They went on further to claim that if they knew now what Countrywide et al allegedly knew then,  Maine State Retirement Savings would never have bought in.

So let’s take a look at what we see.  Here is Countrywide,  one of the founding members of MERS,  who slams their customers into unwanted insurance policies so Countrywide can collect fees and boost their profits,  sets up a fraudulent appraisal process which over a period of years inflated the value of homes so more and more money could be loaned against the assets,  forces their employees to invest their retirement savings into Countrywide stock a la Ken Lay and Enron,  and cooks their books to induce investors to buy their fraudulent paper.  Doesn’t sound like a great group of guys now does it?

Now here is an interesting question.  Why would Bank of America,  one of the largest banks in the world,  rush to buy the remains of Countrywide when it was clear that a great deal if not all of their loan portfolio was not only sour,  but fraudulent, even toxic?  I don’t know the answer to that and no one,  other than the execs involved in that decision,  probably ever will.  We might find the answer by finding pieces of the puzzle which paint the answer,  but at the moment,  it remains a mystery.

More as it comes available. Make sure you book this website as it updates with excellent information.

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