(NECN: Brian Burnell, Hartford, Conn.) - It's a settlement worth millions of dollars to thousands of people across the country who lost their homes to foreclosure. Connecticut's attorney general says they will get money back from the post child for sub-prime mortgages.
This is in regards to the Countrywide Financial situation. The mortgage company became synonymous with sub-prime mortgage lending and was widely blamed for contributing to the economic meltdown. Connecticut's attorney general says the company will now pay for its misdeeds.
Countrywide Financial was one of the biggest issuers of sub-prime mortgages when economic times were good. When the economy went south so did many of their mortgages...a situation that lead many to point to Countrywide as one of the catalysts for the meltdown. Critics said the company loaned money under false pretenses to people who simply could not afford the homes they were buying. They said Countrywide didn't care as long as it made money issuing loans. A lot of those mortgages went into foreclosure. A lot of people lost their homes. Connecticut's Attorney General says Countrywide will pay millions of dollars to people it victimized across the country.
Richard Blumenthal, D-CT Attorney General: "In Connecticut alone, 370 families will be getting about $3,400 each as a result of our legal pursuit of Countrywide."
Across the nation Countrywide will pay out more than $110 million to people who lost their homes in large part because the company mislead them into mortgages they could not hope to cover.
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Richard Blumenthal, D-CT Attorney General: "Countrywide used bait and switch tactics, deceptive offers, pressure at the time of closings to put people into homes that they couldn't afford."
Blumenthal says the company inflated appraisals and incomes to get loans approved and charged hidden fees at the end of the deal. To those who say "caveat emptor"... "let the buyer beware"... he says many of the victims were first time home buyers. Lambs led to the Countrywide slaughter.
Richard Blumenthal, D-CT Attorney General: "What Countrywide did to these families was to turn the American Dream into a nightmare. Destroying hope, duping innocent consumers and decimating dreams of home ownership."
Blumenthal points to the Countrywide situation as proof that there is a need for a federal Consumer Financial Protection Agency. Trouble is the talk in Washington that could be compromised away. The AG says that's a bad idea.
Richard Blumenthal, D-CT Attorney General: "We need a Consumer Financial Protection Agency to stop exactly these kinds of misleading and deceptive practices that destroy the American dream for many consumers."
Countrywide started sending out checks late Friday. By the time it's finished, the company will issue $113 million to people who lost their homes.
