Attorney General Fights Foreclosure Injustice

by Donald Hanz on Foreclosure Crisis

Last Wednesday, a lawsuit was filed by Attorney General Richard Blumenthal against Countrywide Financial Group for alleged violations of banking laws and consumer rights. If the case prospers, hundreds of Connecticut homeowners will probably get their homes back or receive enough monetary compensation that will allow them to purchase a house again.

The said lawsuit, if won, will invalidate the loans which contains provisions that violated certain lending laws. This will allow the original homeowner to get rid of the unreasonable and illegal fees that caused their mortgage payments to skyrocket, which then left them at the mercy of foreclosure. in addition to this, the state will also be asking for as much as $100,000 in fines for each violation of banking law and $5,000 for every violated consumer law.

The Attorney General also promised to return, if possible, the foreclosed properties to the respective homeowners who fell victims to these unscrupulous lenders. If the homes were already sold to another family, compensations should be paid to the original owners.

Countrywide were responsible for about 400 foreclosure filings in the state. Unfortunately, there is no data that points to how many of these homes were really repossessed.

Until this lawsuit is resolved, the state is asking Countrywide to suspend all pending foreclosure activities. Although Countrywide was bought by bank of America last July, only Countrywide is being sued. A representative from Bank of America refused to comment on the lawsuit but made assurances that the company is not engaged in any illegal lending practices.

The lawsuit also said that Countrywide encouraged their clients to take out mortgages even if they could not afford the mortgage payments. In order to get approved for such loans, the lender falsified information and inflated the borrowers’ incomes so that they will be qualified. To make matters worse, some of the mortgage terms were changed during closing without the borrowers’ knowledge.