Lender Countrywide Financial Corp. is facing a class action lawsuit, filed by two law firms, representing investors who claim the lender misrepresented its financial position and failed to warn investing parties about the potential risks within its mortgage lending portfolio.
In a press release, the law firms of Entwistle & Cappucci LLP and Susman Godfrey LLP place the blame on the mortgage lender and the leadership team in place when the alleged securities violations occurred. Among the named parties is chief executive officer Angelo R. Mozilo, chief operating officer David Sambol and executive managing director Eric Sieracki.

Among the many accusations of securities violations, the law suit claims Countrywide maintained its superior position in the marketplace while failing to implement the proper internal controls, especially in relation to the underwriting process.
The plaintiffs claim in their lawsuit that, “In this regard, Countrywide allegedly misrepresented its position in the mortgage market by stating that the current down cycle in the housing market would actually place the company in a ’superior competitive position’ based on the strength of its ‘capital liquidity positions, superior business model, and best in class workforce.’ The complaint further alleges that the defendants falsely assured investors that Countrywide employed exacting loan underwriting and origination practices to ensure creditworthiness of loan applicants; implemented internal controls to anticipate appropriate loan loss reserves for any negative changes in the credit and housing markets; and maintained actual reserves to adequately meet such market downturns.”