According to the San Jose Mercury News, Mark Zachary, a former regional vice president of Countrywide Financial Corp has brought suit against the lender for wrongful termination. Zachary received an excellent performance review just three months before he was fired.
Why was he fired? Zachary blew the whistle on the joint venture between KB Homes and Countrywide for fraudulent lending practices – detailing instances in which he was strongly encouraged to inflate appraisals by as much as 6%. It is practices such as this that have left many homeowners owing more than their home is worth, and has helped created the current housing crisis we are experiencing.
Zachary also claims that Countrywide loan officers would advise applicants who were denied a prime loan rate about what income level to claim so they would be approved for sub-prime or no documentation loans.
Naturally, Countrywide denies all of Zachary’s claims. Countrywide lost $1.2B in the third quarter of 2007.
I find it also interesting that KB Homes has declined to comment in this drama. Could they all be afraid this whistle blower is just the tip of the iceberg?
I suspect that many more former loan company employees, executives, and home builder’s employees will be coming forth with their sordid yet true tales in the months to come.