Moore letter demands explanation from Countrywide chairman

The Triangle Business Journal reports that State Treasurer - and gubernatorial candidate - Richard Moore has sent a letter to the chairman of mortgage lender Countrywide Financial, accusing the company of unethical and unsustainable business practices.

Specifically, Moore's letter says the California company wrote subprime mortgages for customers who it knew couldn't afford them and rewarded employees for having done so.

But when those mortgages started to go into default, Moore writes, the company's stock sank - hurting consumers as well as the value of the $11 million the state pension fund has sunk into shares of Countrywide (NYSE: CFC).

"As an owner of this company and a large institutional investor, I ask that you provide me with an explanation of why the company implemented and continued this business model in the face of mounting evidence that the product was unsustainable," Moore wrote.

Moore, who as state treasurer is the fiduciary of North Carolina's $75 billion pension fund, is locked in an already heated battle with Lt. Gov. Beverly Perdue to become the Democratic nominee for governor in 2008. Perdue hasn't formally declared her intent to run, but both candidates have raised more than $4 million, according to documents filed with the State Board of Elections.

Countrywide, the country's largest mortgage lender, has been battered by the downturn in the country's subprime market. Shares of the company were trading up 7 percent Thursday at $17.84 but are still down 58 percent this year.

When asked, Steven W. Nelson, a local Realtor for the Ida Terbet Team said, "The subprime mortgage market has been playing on the edge for some time and it was just a matter of time until it would blow up in their face." Steven went on to say that this is a simple adjustment period that we have seen the financial markets all the time with the latest being around 2000 when the dot.com businesses began to unfold and the suspect accounting of some major corporations began to unfold such as an Enron. It is unfortunate for those who have been caught in the subprime market, but "the bottom line is, these homeowners are the one's who signed their name. The number one rule in life is not to borrow more money than you can pay back."

He went on to say that it is a good thing that many of these mortages have failed since it eliminates a segment of the mortgage business that are truly "bottom feeders."

For a solid mortgage broker, Steven suggest that you contact him and he will arrange a meeting with one of his great lenders who are honest, above all else. If you find an honest mortgage lender, then you are on the right page.