Illinois, Countrywide in lawsuit

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Scott Jagow: The mortgage lender Countrywide better round up the lawyers. The state of Illinois is suing the company. Marketplace’s Steve Henn reports.

Steve Henn: In a civil lawsuit to be filed later today, Illinois Attorney General Lisa Maddigan accuses Countrywide of engaging in unfair and deceptive business practices.

The suit alleges that Countrywide designed and marketed its mortgage products with both eyes firmly fixed on Wall Street. Maddigan says the company set up incentives to boast its sales of bundled mortgages to investors at the expense of homeowners who were sold loans they couldn’t possibly afford.

Lisa Maddigan: We also are finding people who have told us they were upfront about what their income and assets were. That’s not what was put down in the documentation.

Maddigan plans to ask the Illinois courts to modify any deceptive or unfair loans and give her office 90 days to review any new foreclosures. Countrywide’s press office did not return calls seeking comment.

This is the first suit of its kind brought by a state Attorney General, and it’s being closely watched across the country.

In Washington, I’m Steve Henn for Marketplace.