Thursday, January 15, 2009

Your Tax Dollars At Work

More trouble for Countrywide, the dodgy mortgage company that has become a symbol of big-money corruption in lending:

In marketing, advertising and testimony before Congress, Countrywide Home Loans has said repeatedly that it is working hard to modify the mortgages of financially strapped borrowers caught up in the subprime meltdown. But in a New Hampshire court, attorneys for the lending giant are singing a different tune, describing such assurances as “mere commercial puffery.”

Saying the modification offers are “only Countrywide’s vague advertisements,” attorneys for the lender are asking the court to throw out a lawsuit alleging breach of good faith, fraud, negligence and misrepresentation, which was filed on behalf of a family that was refused a loan modification by the California-based company.

“It’s breathtaking,” attorney Mary Frances Stewart of Concord, N.H., said of Countrywide’s response to the lawsuit she and co-counsel Krista Atwater filed in Merrimack County Superior Court.

Meanwhile, Countrywide itself received tens of billions of dollars in direct loans from Federal Home Lending Banks (FHLBs) to keep it in business when investors decided that maybe it wasn't such a great investment.

And Countrywide's parent company, Bank of America, received another $25 billion in no-strings-attached federal cash.

Countrywide should have been allowed to collapse last year. It would have saved taxpayers perhaps $25 billion in immediate cash, plus the inevitable losses on FHLB loans when those get defaulted on and the collateral houses are not worth anywhere near what was lent.

And that's no "commercial puffery."

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