Angelo Mozilo, former chairman and chief executive of Countrywide Financial,… (Jonathan Ernst / Reuters )
California has reached a $6.5-million settlement with two former Countrywide Financial Corp. executives that the state had accused of predatory lending. Most of the money will be used by the state to create a foreclosure relief fund for troubled borrowers, Atty. Gen. Kamala D. Harris said Wednesday.
The $5.2-million fund will be used to educate homeowners and assist other agencies statewide in prosecuting mortgage fraud. The intent of the settlement was, in part, to "restore justice" to homeowners who had been harmed by the foreclosure crisis, Harris said.
The remaining $1.35 million of the settlement, reached with former Countrywide Chief Executive Angelo R. Mozilo and former President David Sambol, will be paid to the attorney general's office to cover investigation costs and attorneys' fees.
Countrywide has agreed to reimburse the executives for the cost of the settlement. Neither of the former officers admitted wrongdoing.
The settlement ends a predatory lending suit filed by the state attorney general's office in June 2008 against the company and its executives. The agreement augments an October 2008 settlement with the company to provide loan modifications and other foreclosure relief valued at $8.68 billion nationally, including $3.5 billion in California.
Preeti Vissa of the Greenlining Institute consumer group criticized the settlement as too small.
"Clearly much more needs to be done if we want to make a meaningful difference in the lives of the people who have been affected by these loans," she said.