>FROM "CONSPIRATORIAL THEORY" TO COMMON WISDOM…LOS ANGELES TIMES, DEC 14, 2007
The Calabasas lender says California and Illinois have issued subpoenas.
By E. Scott Reckard and Marc Lifsher, Los Angeles Times Staff Writers December 14, 2007
The nation’s No. 1 mortgage lender, Countrywide Financial Corp., is under investigation by California Atty. Gen. Jerry Brown and the attorney general’s office in Illinois, the Calabasas company said Thursday.
Countrywide said it had received subpoenas for documents from California and Illinois but declined to elaborate, citing company policy. It said it was cooperating in the two probes.
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The investigation in Illinois, which was first reported in the New York Times, grew out of a probe into broker One Source Mortgage, which the state has charged with luring borrowers into loans they couldn’t afford. Countrywide was the chief provider of these loans known as payoption mortgages which allow a borrower to pay less than the full interest that comes due each month, sending the loan balance up.
A former employee of One Source told investigators that the only Countrywide loan the broker tried to sell was the payoption type because the rebates were so huge, said Veronica Spicer, an assistant Illinois attorney general in the consumer protection division.