State issues conditional license to Countrywide

CHICAGO -- Illinois regulators issued a conditional license to Countrywide Home Loans Inc. on Thursday so the company can meet its obligations under a national settlement over deceptive mortgage practices.

Illinois Department of Financial and Professional Regulation officials said Countrywide can't offer mortgages to new customers and will be monitored each month to make sure it complies with the settlement.

But Countrywide officials said the decision would not affect its status in Illinois because most of its loans originate through a separate subsidiary, Countrywide Bank, which is regulated by the federal government and not the state.

"This decision has no impact," said Countrywide spokeswoman Jumana Bauwens.

"Countrywide continues to be authorized to conduct business in the state of Illinois," she said in a statement. "We are open for business in Illinois -- actively serving new home buyers in the state, as well as our existing Countrywide customers there. The entity to which Secretary Martinez's decision applies has made virtually no loans since 2007."

Illinois Attorney General Lisa Madigan's office and California officials negotiated the settlement with Bank of America to settle a predatory lending lawsuit against Countrywide Financial, which the Charlotte, N.C.-based bank acquired over the summer.

The settlement applies to people who got mortgages through Countrywide and lets homeowners with the riskiest loans modify their terms.

For struggling Illinois homeowners it will mean about $185 million in loan modifications, Madigan said.

If all 50 states joined, the settlement could provide $8.7 billion in relief to 400,000 borrowers, Deborah Hagan, chief of Madigan's Consumer Protection Division, has said.