This is big. Following the announcement of lawsuits against Countrywide Financial this morning by the states of California and Illinois, Governor Gregoire said the state is going to attempt to revoke Countrywide’s license to operate in the state of Washington after an investigation found that the company had engaged in predatory lending practices:
“The allegation that Countrywide preyed on minority borrowers is extremely troubling to me,” Gregoire said. “And I hope to learn eventually just how much this may have contributed to foreclosures in our state. The allegation offers evidence that Countrywide engaged in a pattern to target minority groups and engage in predatory practices.”
“That’s why we intend to bring the full weight of the state on Countrywide to rewrite home loans for minority borrowers who may have been misled into signing predatory mortgages,” the governor noted. “My job is to protect hard-working Washingtonians, and protect them we will.”
Countrywide is also being fined $1 million for discriminatory lending and will be required to pay $5 million in back assessments. You can read the charging document here 
. More on this as it develops.
I too, thought that this was a significant story until I actually talked with someone who works at Countrywide, here in WA.
What the article fails to mention is that the license that Gregoire was seeking to suspend is actually a license that Countrywide stopped using back in January of this year.
Gregoire was looking at suspending the license of Countrywide Home Loans, but since January of 2008, Countrywide has been funding loans under a new license, Countrywide Bank. I’m going to assume that they were doing this in order to better align themselves with Bank Of America, as that merger is currently taking place and should be finalized within the next 15 days or so.
Simply stated, this is nothing more than Gregoire trying to get some free publicity. It’s well know that Washington State has done very little in the way of protecting their consumers. They were one of the very last states to implement any type of policy on predatory lending. I believe that up until 2005, there was nothing on the books to protect consumers from predatory lending.
Even now, as I’m sure you are well aware, the state doesn’t offer any type of substantial assistance to homeowners at risk of losing their homes.
I think there is strong case to be made for private companies that are better able to help people renegotiate their loan terms. In the case of not for profit agencies, state hotlines, etc, I think this is truly a case of “you get what you pay for…”
In closing, I also find it amusing that the state attempts to get publicity out of Countrywide in the 11th hour, as the company is about to be absorbed by Bank of America.
Washington Mutual made almost as many Option ARM loans as Countrywide, will Gregoire be so quick to get publicity out of a Washington based company that surely contributes a pretty penny to the state coffers. I don’t think so.