Public Citizen’s Texas Office
Award Winning Advocacy
Public Citizen Texas office: Air Quality 2006 Conference “Outstanding Non-Profit Organization Award” Tom “Smitty” Smith, State Director: Campaign for People’s “Thomas Paine Award” U.S. EPA’s “Award of Excellence” 2001 Austin Chronicle Best of Austin “Best People’s Lobbyist” Public Citizen’s Solar Austin Campaign: Livable City “Vision Award” Interstate Renewable Energy Council “Innovation Award” 2004 Austin Chronicle Best of Austin “Best Grassroots Effort” Texas Renewable Energy Industries Association “Special Recognition Award”
May 13, 2010
Texas consumers are at a disadvantage due to ineffective state action against home mortgage
lenders whose deceptive practices have forced thousands of them into foreclosure. Texas
Attorney General Greg Abbott has dropped the ball on enforcement, and the few efforts made
last year to address subprime mortgage lending have been ineffectual and targeted consumers for
the failure as much as corporations.
The need for action by Texas’ AG was highlighted last week by the Illinois and California
Attorneys General filing separate civil suits against Countrywide Financial Corp, its chief
executive and its president. Among the complaints are allegations that the home mortgage
lender violated state law by using deceptive practices to convince people to apply for home loans
they couldn’t afford.
Enforcement action is especially needed in Texas since a press release by the California AG
stated that his investigation revealed Countrywide operated an office out of Plano, Texas that
was devoted to making routine underwriting exceptions.
Texas law includes a Deceptive Practices Act, yet the statute has not been enforced against
In October and November of 2007, Attorney General Abbott officially recommended five
measures to “address the growing housing crisis”. Attorney General Abbott recommended
lenders review foreclosure cases before sending them to collection, create customer-complaint
groups and improve communication with customers. He concluded, “Mortgage lenders, loan
servicers, and public officials must work cooperatively on behalf of Texas homeowners who are
affected by the looming house crisis,” in a November 2007 press release.
Public Citizen ? Texas Office
1002 West Avenue, Suite 300 ? Austin, TX 78701
Phone: 512.477.1155 ? Fax: 512.797.8302
Upon AG Abbott’s announcement, the Dallas-based real estate news agency RealtyTimes
decried his work-together-with-mortgage-lenders approach as hopeless. Illinois and California
have proven that states, like Texas, that have statutes prohibiting deceptive practices can enforce
the statutes to attempt to obtain a remedy for victims.
The Texas AG has rarely mentioned subprime lending since November of 2007. In a November
2007 press release, Attorney General Abbott stated that Texas settled with subprime lender
Ameriquest, returning $21 million to Texans. However, the release went on to proclaim, “a
growing number of scam artists are duping lenders, mortgage companies and other businesses in
the mortgage industry.” The release stated that people who attempt to obtain mortgage loans
with false information commit mortgage fraud and that in order to deal with people who attempt
to rip-off of mortgage lenders, the Texas AG is a member of the Texas Mortgage Fraud Task
force. Texas should not officially blame victims for record-setting foreclosure levels.
Illinois’ suit against Countrywide seeks restitution to consumers for loans originating with
deceptive practices as well as 90 days to review loans in foreclosure to determine whether there
exist affordable alternatives. We hope you will urge our State’s Attorney to investigate Countrywide and take any necessary action. Please find the attached letter and materials Public
Citizen sent to Attorney General Abbott regarding this matter.
On behalf of the Citizens of Texas,
Kimberly Jarrett Tom “Smitty” Smith
Consumer Protection Researcher State Director