COUNTRYWIDE, B OF A TO Defy State of IL Ruling Directing "No New Mortgage Loans" Here!

Real Estate Agent with Dean's Team - Keller Williams Realty Partners Chicago IL

Earlier this month, the Bank of America, as well as Countrywide Homes Loans, which the mega-bank recently acquired, agreed to modify thousands of risky, resetting home loans here and in other states to forestall many possible foreclosures. 

The settlement was reached in court, in response to a lawsuit brought against the formerly-largest lender of Residential Home Mortgage Loans by the Attorneys General of Illinois, and those of one dozen other states spread across the U.S.

See our October 6th post discussing this settlement via

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 our current post via BlogChicagoHomes.comfor more information, as well as a link to Mary Ellen Podmolik's article today in the Chicago Tribune.



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James Wexler - Scottsdale, AZ

Dean - when all this dust settles , years into the future, do you see these giant banks having wholesale mortgae lending divisions through mortgage brokers ?? or will the inherent risk of potentially riskier underwriting be too high?

Oct 18, 2008 05:31 AM #1
Dean Moss
Dean's Team - Keller Williams Realty Partners Chicago IL - Chicago, IL
Dean's Team Chicago IL Real Estate Team

James -

My guess is - brokers will still exist, but be far more highly regulated than they have in the past, perhaps prompting many to leave the industry.

Therefore, there will still be a "wholesale' division, and will still generate business, but not run amok like it did.

My opinion, anyway - who knows for sure?


Oct 18, 2008 06:42 AM #2
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Dean Moss

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