Countrywide Hit By Two State Lawsuits

June 25, 2008 3:20 p.m. EST

Springfield, IL (AHN) - Attorney Generals from California and Illinois have filed suit against Countrywide Financial, alleging the troubled lender misled borrowers into signing on to mortgages they could not repay.

Illinois Attorney General Lisa Madigan filed a civil suit against Countrywide and CEO Angelo Mozilo, claiming the company used unfair marketing, inflating borrowers' income and pushed employees to complete such loans.

Madigan wants Countrywide to drop all loans made since 2004 and asks Mozilo pay damages. In addition, the lawsuit asks the Ill. Attorney General office be given 90 days to review all Countrywide mortgages now in foreclosure or headed there.

California's Attorney General Jerry Brown has also sued Countrywide, charging the lender used unfair practices to hawk mortgages. The lawsuit also names Mozilo, as well as David Sambol, the company's chief financial officer. The California charges stem from a state investigation of the lender.

The two lawsuits come on the same day Countrywide investors vote on Bank of America's $4 billion acquisition of the lender.