Updated from 12:58 EDT
Bank of America's
proposed acquisition of the troubled mortgage lender on Wednesday, as scrutiny of its lending practices heated up further.
Stockholders representing more than 69% of Countrywide's outstanding shares approved the $2.8 billion transaction, which has fallen from about $4 billion due to a drop in price for BofA stock since the deal was announced. The deal, which the company expects to close on July 1, will rescue the country's largest mortgage lender from potential insolvency and expand the business of Bank of America, the largest U.S. retail bank.
Two state attorneys general also filed suit against the Calabasas, Calif.-based Countrywide on Wednesday, claiming it used deceptive practices to con consumers into buying homes they couldn't afford. Countrywide -- which once fueled the current housing crisis as the largest subprime-mortgage originator in the country -- is the subject of several probes, lawsuits and investigations.
California Attorney General Edmund Brown Jr. on Wednesday filed suit against Countrywide, its CEO Angelo Mozilo and President David Sambol. The suit alleges that Countrywide used deceptive tactics to sell "complicated, risky, and expensive loans" which it then sold off to other investors, without regard for the borrowers' ability to handle the debt.
"Today's lawsuit seeks relief for Californians who were ripped off by Countrywide's deceptive scheme," Brown said in a statement.
Illinois Attorney General Lisa Madigan filed a similar suit, alleging Countrywide engaged in "unfair and deceptive conduct" with its "unnecessarily risky and costly mortgage loans." Madigan said the company tricked tens of thousands of homeowners into loans they could not afford.
"As a result, our communities are now being destabilized by a skyrocketing number of home foreclosures," she added.
Still, the acquisition seems set to pass, with banking regulators approving the acquisition earlier this month.
In a similar sign of shareholders approving last-ditch bail-out plans,
shareholders on Tuesday approved a $7.2 billion capital raise led by private-equity firm TPG.
Countrywide shares were falling 1.3% to $4.60 in recent trading.