Class Action Law Suite Against Country Wide Home Loans
As per the complaint, Country Wide Home Loans gives misleading information to its clients that it is changing the mortgage loan portfolio.
It also announced that the home loan services were going through an upgrade. On July 12, 2007, the company gave itself a false boost saying that they are biggest mortgage originator in the United States.These announcements made were intended to conceal the increasing number of delinquencies in the mortgages, and also increase the impairment charges. Also, in July 2007, the company gave the shocking news to the consumers that more than $417 million was in impairment charges and a whopping $292.9 million as loan loss provision.
Due to the false reports, there was an increase in Country Wide Home Loans' stock price. The stock price increased by a large margin of 10 percent, and closed at $30.50 per share. Due to false upgrading of the company in order to hide the actual facts, the shareholders were misled, and they built false hopes on their stocks. This caused a class action law suits to be initiated against the company. Since this came 4 days later, the company reassured its customers. However, there was a lot of anger among the shareholders. The company’s stock fell again by $1.00, and closed at $27.86 per share. More than 48 million shares were sold.
Also, parallel to this Country Wide Home Loans was dealing with lawsuits that involved builders who conspired with the company to inflate the prices of the homes that they were selling. Several homeowners were expected to join the law suit and this has been going on since 2006.
More Articles :