Madigan subpoenas Countrywide, Wells Fargo
CHICAGO -- As a nationwide housing downturn and credit crunch drags on, Illinois Attorney General Lisa Madigan today issued subpoenas to two mortgage companies to investigate whether they unfairly steered minority borrowers to some loans.
Madigan's office announced it wants a variety of information from Countrywide Home Loans and Wells Fargo Financial Illinois on loans they sold in the state.
The subpoenas ask for details on everything from borrowers' race and ethnicity to their credit worthiness and information on loan costs and features.
"If in fact we find a problem, we will be looking to see what kind of remedy we can fashion for our homeowners," said Deborah Hagan, chief of the attorney general's consumer protection division, which is handling the investigation.
Calabasas, Calif.-based Countrywide Financial Corp., the nation's largest mortgage lender and servicer, said it routinely checks to see that borrowers are treated fairly.
Bank of America has agreed to acquire Countrywide in a $4 billion stock deal expected to close in the third quarter. Hagan said the attorney general subpoenaed Countrywide last year for information on its loan origination practices.
Wells Fargo said race is not a factor in lending. "Wells Fargo has long been committed to fairly and responsibly serving African American and Latino communities," the company said in a statement.
The city of Baltimore sued Wells Fargo Bank in January, alleging in a federal lawsuit that the bank sold high-interest mortgages more to blacks than to whites and targeted black neighborhoods for high-risk and unfairly priced loans.
Madigan's action in Illinois follows a report on high-cost home loans from banks in the Chicago area by The Chicago Reporter. The news magazine's investigation says blacks were three times as likely as whites -- and Latinos were twice as likely -- to end up with high-cost loans.
"It's an investigation to see if there were illegal practices that would have violated our fair-lending laws," Hagan said.
Wells Fargo said data used in the study has limitations.
Madigan's office said the magazine's study looked at so-called "high cost" loans, which have interest rates at least three percentage points above the U.S. Treasury standard and have characteristics similar to high-risk subprime mortgages.