Florida sues Countrywide for subprime lending practices

By Margarita Snegireva. Countrywide Financial Corp was summoned before a judge as part of a widening investigation into subprime lending practices, Florida attorney general said on Thursday.

Photo: Florida sues Countrywide for subprime lending practices

Attorney General Bill McCollum told fellow cabinet members the investigation involving the nation's largest mortgage lender was linked to practices that may have hurt Florida's state-run investment pool.

McCollum's office issued the subpoena to the California-based company on January 17, seeking information and documents on Countrywide's lending practices, especially relating to subprime loans that go to people with poor credit histories.

Countrywide Financial Corporation is a diversified financial marketing and service holding company engaged primarily in residential mortgage banking and related businesses.

Countrywide Financial is composed of:

Mortgage Banking, which originates, purchases, securitizes, and services mortgages. In 2006 Countrywide financed from 17 to 20% of all mortgages in the United States, at a value of about 3.5% of United States GDP, a proportion greater than any other single mortgage lender.

Banking, which operates a federally chartered thrift that primarily invests in mortgage loans and home equity lines of credit primarily sourced through its mortgage banking operation.

Capital Markets, which operates as an institutional broker-dealer that primarily specializes in trading and underwriting mortgage-backed securities.

Insurance, which offers property, casualty, life and credit insurance as an underwriter and as an independent agent.

Global Operations, which provides mortgage loan application processing and loan servicing.

During the year ended December 31, 2005, for example, the Mortgage Banking segment generated 59% of the Company's pre-tax earnings.

On January 11, 2008, Bank of America announced that they plan to purchase Countrywide Financial for $4.1 billion in stock.