2008-06-25.

On June 23rd the State of Washington's Department of Financial Institutions (DFI), filed an official "Statement of Charges and Notice of Intention to Enter an Order to Revoke License, Impose Fine, Order Restitution, Prohibit from Industry, and Collect Annual Assessments, Examination Fees, and Investigation Fees" (13 pages - PDF) against Countrywide Home Loans, Inc., alleging violations of the Consumer Loan Act of Washington, as well as various TILA, RESPA, ECOA, CCPA and HMDA violations. The action comes in the wake of an on-site State audit performed in 2007.

It all adds up to just nearly $6.9 million, not including any federal fines that may be assessed, additional fees for the ongoing investigation, or restitution to those borrowers affected. But we wonder: does it matter when Bank of America is stripping the company, dumping the name, and ditching the shell? Will the State or the Fed's go after the successor party?

A summary from the filing:

Real Estate Loan Pricing - Discrepancies in Rates and Fees Charged to Borrowers.

"During at least 2005 and 2006, [Countrywide] provided Washington borrowers of protected ethnicity or races (target borrowers) less favorable loan products than were provided to other similarly situated borrowers within the same Metropolitan Statistical Area (MSA) during the same time period of the same year.

Upon review of several hundred loan files and considering several factors... the Department identified over 50 target borrowers who received less favorable loan products than the non-target borrowers..."

Underpaid Annual Assessments.

For the years 2002 thru 2007, Countrywide underreported and therefore underpaid annual assessments based on reported loan volume to the tune of $5,594,785.78 in recalculated assessments due and payable to the State.

Inaccurate Filing of Home Mortgage Disclosure Act (HMDA) Data.

Of nearly 600 entries in the 2006 loan application register (LAR), "nearly 150 were inaccurate - representing an error rate of 25%."

Disclosures.

"During at least 2006," the State determined Countrywide failed to provide timely disclosures to borrowers for a total of 29 TILA and RESPA violations.

Failure to Notify Department of Significant Developments.

"[Countrywide] did not notify the Director" of certain developments involving the New York Attorney General and North Carolina's Commissioner of Banks. CW failed to notify WA "in writing within twenty days after receipt of notification of the institution of license revocation procedures in any state agains the licensee or the filing of any material litigation" according to the State.

Countrywide has the right to submit a written request for a hearing to defend itself.



Comments:

Aristotle at 12:22 2008-06-26 said:
Don't expect Bank of America to faint from fear over the filing of these charges.

Their Legal Department decision makers are very tough, and will hire very technically talented outside lawyers to defend these claims while BofA legal department and management review the facts and decide what to do. Typically BofA likes to go multiple rounds in court before even thinking about settling even the most meritorious claim. Those rounds can take a few years. Permalink

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