From the Associated Press:
Countrywide Financial Corp. is accused of using misleading advertising and other unfair business practices to trick borrowers into taking on risky home loans they didn't fully understand in a lawsuit filed Wednesday by the California attorney general's office.
The lawsuit—filed on the same day Countrywide shareholders approved the company's takeover by Bank of America Corp.—stems from information gathered under subpoena after the state launched a probe last year into the troubled company's business.
It also came on the same day Illinois's attorney general filed a lawsuit alleging Countrywide engaged in "unfair and deceptive" practices to get homeowners to apply for risky mortgages far beyond their means.
In addition, a Washington State agency alleged in an administrative action that Countrywide participated in "discriminatory lending practices," the Wall Street Journal reported.
So how significant of a problem is this for Countrywide?
From the Journal:
All states are seeking restitution for borrowers. If the states can persuade the courts to grant restitution, it "could be a staggering blow against Countrywide," said Kurt Eggert, a law professor at the School of Law at Chapman University, in Orange, Calif. "Countrywide could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed."