IL Probing Countrywide Option ARM, B&C Loans

Investigators for the state of Illinois have issued what one official calls "extensive" subpoenas to Countrywide Financial Corp. as part of a far-reaching probe into its origination of subprime and payment-option ARMs.Debra Hagan, chief of the state's consumer protection division, told MortgageWire that investigators are scrutinizing subprime and payment-option adjustable-rate mortgages that Countrywide funded on a retail basis and through loan brokers. "Payment-option ARMs are at the top of our list," she said. Ms. Hagan said the Countrywide probe was sparked, in part, by the state's investigation and subsequent lawsuit against One Source Mortgage, a now-defunct Chicago loan broker accused of misleading consumers about their option ARM teaser rates. Countrywide is cooperating with the investigation, Ms. Hagan said. (See the Dec. 17 issue of National Mortgage News for complete details.)