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The troubled home loan servicer is being probed by Feds for using fraudulent lending practices, financial reporting.
NEW YORK (CNNMoney.com) -- The FBI has launched an investigation into the lending practices of battered home lender Countrywide Financial Corp., according to a report in The Wall Street Journal. The mortgage company is suspected of widespread fraud, the paper said, which may have contributed to the subprime mortgage crisis that has rocked the U.S. economy.
The probe will examine underwriting and mortgage origination practices, and whether the company misrepresented losses related to subprime loans.
Bank of America, which agreed in January to acquire Countrywide for $4 billion in stock, denied any knowledge of a federal investigation.
Calabasas, Calif.-based Countrywide is the nation's largest home lender, responsible for roughly one-fifth of the mortgages in the United States.
Mortgage mess CEOs defend pay
When the housing crash began, Countrywide (CFC, Fortune 500) was faced with an increasing number of subprime customers who were delinquent with their mortgage payments. The company was forced to essentially shut down its subprime lending operations last year to focus on originating loans that conform to Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) guidelines, considered to be safe investments.
On Friday Countrywide's founder and CEO, Angelo Mozilo, testified before the House Committee on Government and Oversight Reform, along with two other CEOs who resigned in the wake of the mortgage crisis -- Charles Prince of Citigroup (C, Fortune 500), and Stanley O'Neal of Merrill Lynch (MER, Fortune 500). All three defended their lofty compensation packages, despite the loss of billions to their companies and shareholders.
There is no evidence to suggest that Bank of America (BAC, Fortune 500) will back out on its acquisition of Countrywide, the paper said, and may even be trying to speed up the process, according to some sources.
http://money.cnn.com/2008/03/08/news...ney_topstories
NEW YORK (CNNMoney.com) -- The FBI has launched an investigation into the lending practices of battered home lender Countrywide Financial Corp., according to a report in The Wall Street Journal. The mortgage company is suspected of widespread fraud, the paper said, which may have contributed to the subprime mortgage crisis that has rocked the U.S. economy.
The probe will examine underwriting and mortgage origination practices, and whether the company misrepresented losses related to subprime loans.
Bank of America, which agreed in January to acquire Countrywide for $4 billion in stock, denied any knowledge of a federal investigation.
Calabasas, Calif.-based Countrywide is the nation's largest home lender, responsible for roughly one-fifth of the mortgages in the United States.
Mortgage mess CEOs defend pay
When the housing crash began, Countrywide (CFC, Fortune 500) was faced with an increasing number of subprime customers who were delinquent with their mortgage payments. The company was forced to essentially shut down its subprime lending operations last year to focus on originating loans that conform to Fannie Mae (FNM) and Freddie Mac (FRE, Fortune 500) guidelines, considered to be safe investments.
On Friday Countrywide's founder and CEO, Angelo Mozilo, testified before the House Committee on Government and Oversight Reform, along with two other CEOs who resigned in the wake of the mortgage crisis -- Charles Prince of Citigroup (C, Fortune 500), and Stanley O'Neal of Merrill Lynch (MER, Fortune 500). All three defended their lofty compensation packages, despite the loss of billions to their companies and shareholders.
There is no evidence to suggest that Bank of America (BAC, Fortune 500) will back out on its acquisition of Countrywide, the paper said, and may even be trying to speed up the process, according to some sources.
http://money.cnn.com/2008/03/08/news...ney_topstories