CHARLESTON - West Virginia's Darrell McGraw joined a group of other state attorneys general Tuesday, filing suit against Countrywide Financial Corp. over loans made to homeowners.
The troubled company is facing actions from all directions, including a federal investigation. McGraw says it made loans to West Virginians that were unaffordable and filed the action even though the state has not been hit particularly hard by the nation's foreclosure crisis.
"Foreclosures in a neighborhood affect the value of all homes in that neighborhood," McGraw said. "Therefore, while the consumers facing foreclosures are directly affected by Countrywide's practices, all homeowners are indirectly affected."
Other prominent state attorneys general like Jerry Brown of California, Richard Blumenthal of Connecticut, Bill McCollum of Florida and Lisa Madigan of Illinois have filed similar suits in recent months.
McGraw says the company induced consumers to take out adjustable rate mortgages that offered a teaser rate for the first 2-5 years but then reset at a much higher rate.
After 15 years of monthly payments, those who did not put money down on their homes owed a balloon payment of almost the original amount borrowed, McGraw said.
West Virginia has consistently posted one of the lowest foreclosure rates in the country during the national crisis.
The Federal Trade Commission is investigating Countrywide's loan-servicing practices, while the federal Department of Justice also has lawsuits against it pending.
Bank of America bought Countrywide for nearly $2.5 billion when it was the largest mortgage lender in America.