Mortgage Loan Compliance | Oregon vs. Countrywide Financial Corp.

Countrywide Financial Corp. of Delaware and its underwriters are being sued by the State of Oregon for misleading investors into buying risky mortgage-backed securities. That alleged deceit ultimately cost Oregon: The Oregon Public Employee Retirement Fund was allegedly induced to invest $200 million into home loans originated by Countrywide, and lost $29 million as a result of misrepresentations by Countrywide and its financial underwriters, the lawsuit says.

"Oregon is taking a stand against predatory lenders and the financial wreckage they caused for families and for investors including Oregonians," said Oregon Treasurer Ted Wheeler. "With this lawsuit, we are attempting to recover losses from lenders that took advantage of innocent families, whose only fault was wanting to participate in the American dream and own a home."

The lawsuit, filed in federal court in California, accuses Countrywide of violating securities law by making statements to investors that were materially false and misleading because they misrepresented and/or failed to disclose information crucial to investors' ability to accurately assess the risks of their investments.

According to the lawsuit, Countrywide’s ability to originate residential mortgages on such a massive scale was facilitated, in large part, by its ability to rapidly package -- or "securitize" -- those loans and then, through the activities of the underwriter defendants, sell them to investors as purportedly investment grade mortgage-backed securities.

"Oregon is currently No. 3 nationwide in foreclosures," said Oregon Attorney General John Kroger. "This lawsuit will hold the responsible companies accountable"

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