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Countrywide settles suits with $600 million-plus record payout

NationalMortgageProfessional.com
Aug 03, 2010

Countrywide has agreed to pay more than $600 million in settlements to shareholder lawsuits, a record payout to date and the highest fine paid to date in the aftermath of the sub-prime meltdown. In Los Angeles, U.S. District Judge Mariana Pfaelzer handed down the judgement in a lawsuit alleging that Countrywide investors were misled about the mortgage lender's lending practices. Countrywide's accounting firm, KPMG, which signed off on Countrywide's financial statements from 2005 to 2006, agreed to pay an additional $24 million as part of the settlement.    The case was led by a number of pension funds, including the New York State Common Retirement Fund, that state's $132.5 billion public pension fund, and five New York City pension funds. It was brought by investors in Countrywide securities between March 2004 and March 2008. The pension funds claim that Countrywide, its Chief Executive Angelo Mozilo President David Sambol, former Chief Financial Officer Eric Sieracki and other officials misled them about the lender's reliance on sub-prime and option adjustable-rate mortgages (option ARMs) to spur growth, while assuring these investors that Countrywide would endure a downturn in the housing market. The New York State Common Retirement Fund provides benefits for one million-plus state and government employees. It is the third largest public pension fund in the United States. Countrywide is not our of the clear just yet as the company, along with Mozilo, Sambol and Sieracki, are accused in a civil fraud lawsuit by the Securities & Exchange Commission (SEC) of misleading investors. The SEC also accused Mozilo of insider trading over his alleged realization of more than $139 million of profit through stock options in 2006 and in 2007.  
Published
Aug 03, 2010
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