STATE OF IL TO COUNTRYWIDE HOME LOANS - "No New Mortgage Loans in Illinois!" Countrywide Says - "We're Still Open!"
COUNTRYWIDE, BANK OF AMERICA PARENT SAY FEDERAL CHARTER STATUS OF COUNTRYWIDE BANK FSB WILL ALLOW IT TO OPERATE HERE DESPITE STATE ACTION!
To settle a court fight brought on by the Attorneys General here in Illinois and in a dozen other states, Countrywide Home Loans, as well as their new parent company, Bank of America, agreed to set aside millions to modify thousands of risky, Interest-Only and Similarly-Risky Home Loans across the state into fixed rate loans with lower, stable monthly payments.
See our October 6th post discussing this settlement here at BlogChicagoHomes.com.
Yesterday, Illinois Bank Regulators attempted to block Countrywide from issuing any new loans here in the state. They offered the lender a conditional license extension, through next April 30th only, allowing only restructuring of the existing high-rate loans, and no new ones.
Countrywide, however, says they have no intention of following the state's directive. To back up their decision, they point out that while the Countrywide Home Loans marketing and originating arm operate under State of Il License, Countrywide Bank FSB - the entity that actually makes the loans - operates out of state, as a Federally Chartered Bank.
Said Bank of America Spokesman Dan Frahm Thursday, "We will fully cooperate with the [state] on this issue but we think it's very important that our customers, our existing customers or even those considering future home financing options understand that Countrywide is still open for business in Illinois."
The Illinois Department of Financial and Professional Regulation, which also regulates Real Estate Licensees across the state, has been investigating the record and business practices of Countrywide for over a year and a half. In their opinion, Countrywide no longer commands "the confidence of the community." The lender also closed 21 of their branches without adequate notification, in violation of IL Law.
Countrywide Home Loans received a fine of $185,000 for the branch closing infractions. Their license was under review until last Wednesday, and they were permitted to operate business as usual, and make new mortgage loans, throughout their Administrative Hearing process.
But now - is the lender operating in violation of state law?
Susan Hofer, IDFPR Spokesperson, stated the agency has "no control over their federal charter. We took this action because we don't believe that Countrywide Home Loans should be issuing new loans. We can't tell the federal government what they should do. All we can say is we don't think Countrywide should be making loans."
Countrywide issued over 250,000 loans across the country, including states affected by the court settlement, during the Third Quarter, 2008. Hundreds of new loans are currently in process throughout Illinois waiting to close.
See Mary Ellen Podmolik's story in today's Chicago Tribune for more info.
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