Is Governor Gregoire just a little too late in regards to Countrywide’s lending tactics? Aren’t we merely days away from the Bank of America takeover?
As I drove back to the office today after teaching yet another short sale class, I heard the news on KIRO 710 AM that Governor Gregoire is seeking to pull Countrywide’s lending license because of an investigation that uncovered predatory lending practices aimed at minorities. WA State will fine Countrywide 1 million dollars for discriminatory lending practices and attempt to collect an additional 5 million for back assessments due.
From Governor Gregoire’s website:
DFI is required to examine every home-lender licensed in the state of Washington. The agency conducted its fair lending examination of Countrywide last year. At that time, DFI looked at roughly 600 individual loan files and uncovered evidence that Countrywide engaged in discriminatory lending that targeted Washington’s minority communities. The agency also found significant underreporting of loans during its investigation.
“The allegation that Countrywide preyed on minority borrowers is extremely troubling to me,
CNN is reporting this morning that Countrywide is now the subject of an FBI investigation into their lending practices. Countrywide is suspected of engaging in “widespread fraud…which may have contributed to the subprime mortgage crisis that has rocked the U.S. economy.”
The FBI will investigate Countrywide’s underwriting practices, the way loans were originated and their accounting representations to shareholders in regards to subprime loan losses.
I wonder if there are more whistleblowers ready to share what they know, or perhaps they already have which is what prompted the investigation.
This makes me believe that we are going to see many, many, many lenders in the next several weeks coming clean very fast about any accounting irregularities that they might have been trying to delay.
In addition, watch for underwriting guidelines to FURTHER tighten and expect that all publicly traded companies to come out with new “best practices” guidelines for all employees and third party originators. The big question is, will the new best practices guidelines will apply to senior management?
I’m trying to imagine what it would be like to be a Countrywide employee today, facing the possibility of being interviewed by the FBI.