The suit claims that Countrywide placed borrowers into mortgages they could not afford, as well as loans with rates and penalties that were misleading, McCollum says in a statement announcing the charges. McCollum also claims Countrywide hid the negative effects of teaser loans, including rising rates and prepayment penalties.
Investigators with the attorney general's office believe Countrywide offered reduced documentation or no documentation loans for loans with high interest rates and prepayment penalties, so that it could sell the loans for higher prices on the securities market.
"It appears to us Countrywide did no due diligence and accepted applications which were patently fraudulent and reflected no ability on the part of the borrowers to make the required payments," said Marc Taps with Legal Services of North Florida in the attorney general's statement. "We cannot help but conclude that the most financially unsophisticated segment of the population was targeted by the brokers who knew Countrywide would write these mortgages."
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