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Illinois Attorney General Lisa Madigan plans to file suit against Countrywide and their orange-tinted CEO Angelo Mozilo tomorrow for risky and deceptive mortgage lending practices in the state.  Ms. Madigan claims that the state has ample evidence to charge Countrywide for lending practices that have put borrowers in loans that can’t be repaid, and using sales and marketing tactics that encouraged borrowers and rewarded employees to take and make risky loans.

Illinois, like other parts of the country is dealing with a massive uptick in home foreclosures.

From the Wall Street Journal:

In a draft of the complaint, Illinois alleges that the company engaged in “unfair and deceptive practices” in the sale of mortgage loans. The 78-page document says the company loosened its underwriting standards, structured loans with “risky features” and engaged in “marketing and sales techniques” that incentivized employees and mortgage brokers to push loans whether or not homeowners had the ability to repay them.

…

In an interview, Illinois Attorney General Lisa Madigan said Countrywide “broke the law and we plan to hold them accountable for that.” She added that Countrywide’s actions have led to widespread foreclosures in her state and have wrecked havoc around the world. “The impact on individual homeowners and communities and the country and the global economy is unbelievable.”

Ms. Madigan says she is asking that all Countrywide loans originated using “unfair and deceptive” practices be rescinded or modified in some way, even if Countrywide has to repurchase the loans. She is also asking that her office be given 90 days to review any loans that are currently in foreclosure or that are moving toward foreclosure. As part of its investigation, the Illinois attorney general’s office interviewed about 30 former Countrywide employees and mortgage brokers and reviewed more than 100,000 pages of documents, Ms. Madigan said.

Mr. Mozilo was included as a defendant because he “participates in, manages, controls, and has knowledge of the day-to-day activities” of Countrywide, the lawsuit says.

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Illinois to sue Countrywide, Mozilo