Lawsuits Piling Up For Countrywide

Bob at Politics in the Zeros, who has been on top of a lot of banking and mortgage crises issues ever since I have been reading his Blog, provides more info on another lawsuit coming at Countrywide since they were purchased by Bank of America. It appears some of Countrywide's bondholders want to force them into bankruptcy to grab their assets:
Why? Because Countrywide didn’t tell holders of certain of their convertible notes that, due to them being bought, the notes could be cashed in. BNY Mellon as a custodian holder of these notes has sued.

And what is unique in this case is the pack of dogs (Countrywide bondholders), now have a vested interest in pushing Countrywide into bankruptcy so they can get some of the meat (Countrywide’s servicing unit), instead of worthless bones (Countrywide’s Debt).

This must be that “invisible hand of the marketplace” capitalists are so proud of.

Being ever so astute in the world of finances (NOT!) I had to wonder about how this might end up playing out against the recent lawsuits by several states, including Connecticut, against Countrywide:
I think about all of the people that screwed in the Enron scandal because of big corporate creditors getting paid before stockholders did. (or something like that?) I can just imagine that the consumer would be last in line in the pecking order.
Bob, being the typical answer man, asked Sue:

Sue, who is a CPA just looked it up

If bankruptcy, here’s the order of who gets paid first

1) secured creditors
2) non-dischargeable (taxes, student loans, etc.)
3) unsecured creditors

Bonds and preferred stock can be 1) or 3) depending if they were secured or not.

Lawsuits are probably either 2.5) or 3). She says the order of who gets paid is complicated, and can depend on the jurisdiction.

She says call the CT Attorney General (maybe they have a hotline about the lawsuit) and ask.

Yep... Complete and criminally insane deregulation by the "free market run amok" bush administration sure has helped make things safe for everyone from the investors on down to the consumers. The only people that are truly happy about all of this (some vintage brew) are the failed CEOs that regularly bail with golden parachutes:

Countrywide CEO Rapes the Company On Leaving

If the sale of Countrywide to Bank of America goes through:

If he engineers a sale of battered Countrywide Financial to Bank of America, Countrywide CEO Angelo Mozilo stands to walk away with a severance package worth more than $110 million, the Los Angeles Times' Kathy Kristof reports tonight.

Such a payout would come on top of huge gains Mozilo has made selling Countrywide stock during the mortgage crisis. As the mortgage industry went into a nose dive in late 2006 and 2007, Mozilo cashed out about $140 million in stock options, becoming one of the highest-paid executives in the country,


plus a cash payment equal to three times the greater of his average bonus or the incentive bonus paid the previous year. Net value: $87.8 million.

In addition, Mozilo has two pensions that his severance agreement gives him the right to receive as a lump sum upon his departure. Those pensions were worth $24 million as of December 2006, the last time the company was required to report their value.
for driving a mortgage company into bankruptcy. Meanwhile millions of Americans are losing their homes. Imagine how many homes could be saved if all of that money that turd is getting, and has gotten, for running the company into the ground were put to good use?

No... There is no class war going on in the good ol' USofA.

More recently Brewed in New Milford:

Countrywide sued by Connecticut

Via buzzflash and by Jonathan Stempel, at Reuters, a bit about predatory lending practices getting Countrywide in legal doodoo in Connecticut and across the nation:

Countrywide sued by Connecticut over loans, fees

Calling the lender's practices "oppressive, unethical, immoral and unscrupulous," Connecticut joined California, Florida and Illinois among U.S. states suing Countrywide, which last year made one in six U.S. mortgage loans.


"Countrywide conned customers into loans that were clearly unaffordable and unsustainable, turning the American dream of homeownership into a nightmare," said Richard Blumenthal, Connecticut's attorney general, in a statement on Wednesday. He also called Countrywide "an insolvency enabler."

Connecticut is demanding that Countrywide make restitution to affected borrowers, give up improper gains, and rescind, reform or modify all mortgages that broke state laws.

Popcorn time! I have my own personal reasons for enjoying this show...

Previously Brewed in New Milford:
Many of you already knew that we were probably losing our home in the first wave of foreclosures hitting this state and the country. I have been sort of busy the last couple of weeks with this issue and (some of) you may have noticed that my Blog has been dormant because I have been so busy.

The bad news? We have given up trying to save our home.

The good news? Unlike the many American families that are, right now, living in tent cities (from the morgtage crisis, floods and also from hurricane Katrina) we have been fortunate enough to find a house to rent. And we will not have to move from New Milford, either. The kids are happy about that second part. They have made friends and like living here.

Finding a place to live has not been easy. Being in the first wave of foreclosures, many landlords refused to rent to us. This issue will likely resolve itself for others later on as more and more people with foreclosures and bankruptcies on their credit reports will flood the renters market. For now it is still an issue. An issue we that we kind of lucked our way around.

Lemons Meet Lemonade

The house we are renting? It is a little bit smaller than the home we loved but it does have some serious plusses that make this a better place for us. First, it has a nice little wood stove in the living room to curl up in front of on those chilly New England nights. It will also save us money on oil. Second, it has a nice, big and sunny room that I plan on turning into my media room that will look right out over the back yard. Third, it is not on a main street so the kids and the dog will be a little safer playing outside. Fourth, we will be saving hundreds compared to what our original mortgage payment started at, never mind how much our ARM was by the time it doubled.

As for the luck part? Well, we are renting the house from someone that was on the verge of losing it all, as well. She pretty much knows our situtation and, because of her own situtation, was a little more forgiving on our credit check. The lady who owns the house is where we were in the foreclosure process about 9 months ago. She did not have "ARM" or sub-prime issues, but employment/relocation issues. As the real estate agent that helped us find a place said, this is a win/win situation for everyone here. She won't be crushed financially like we were and we will have a roof over our heads.

I'll have more to write on this later but, for now, don't be surpised if my Blogging particiaption is a little bit irregular.

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