Indiana Sues Countrywide Over Lending Practices

Indiana has sued Countrywide Financial, becoming the latest state to take the mortgage lender to court over its lending practices.

Indiana Attorney General Steve Carter said in a news release Sunday that a state investigation had uncovered a "pattern of misleading and questionable practices" by Countrywide Home Loans and its parent company.

The investigation found that "homeowners were misled when they were told one thing about their loans while signing contracts that indicated other terms," the release said.

The suit filed Friday in Steuben County Court alleges that Countrywide misrepresented or omitted terms on interest rates, the workings of adjustable rate loans and the loans' costs.


It also alleges that borrowers were misled about prepayment penalties and that some borrowers' incomes were inflated on applications so that they would qualify for loans.

The lawsuit asks the court to void the prepayment penalties and any part of the loans resulting from alleged deceptive acts.

Attorneys general in California, Connecticut, Florida and Illinois also have sued the lender, which faces numerous other lawsuits related to its lending practices.

Countrywide, based in Calabasas, Calif., has previously said that it cannot comment on pending litigation. An answering service at the company's headquarters gave no opportunity to leave a message Sunday.

The company had previously announced its commitment to responsible lending practices, including an effort to keep an estimated 265,000 customers in their homes by modifying at least $40 billion in troubled mortgages.

Countrywide's shareholders approved a takeover by Charlotte, N.C.-based Bank of America in June.