As shareholders gathered in Calabasas, Calif. on Wednesday for a key vote over Bank of America's proposed takeover of Countrywide Financial Corp. (CFC) -- eventually approving the merger by a wide margin -- two state Attorneys General said they had sued Countrywide over alleged unfair and deceptive conduct. California AG Edmund Brown and Illinois AG Lisa Madigan became the latest to pile on legal liabilities to the nation's largest lender and servicer, with separate lawsuits filed just ahead of the key shareholder vote. Brown said that his office had filed suit against the lender, as well as CEO Angelo Mozilo and president David Sambol, for a series of allegedly illegal actions that "exploited the American dream of homeownership." "Countrywide was, in essence, a mass-production loan factory, producing ever-increasing streams of debt without regard for borrowers," Brown said in a press statement released by his office Wednesday morning. "Today’s lawsuit seeks relief for Californians who were ripped off by Countrywide’s deceptive scheme." Brown alleged in a complaint filed Wednesday in Los Angeles Superior Court that Countrywide Financial used "deceptive tactics" to push homeowners into "complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors." Among the tactics singled out in the complaint were refinancing borrowers into complicated and dangerous mortgage programs; "dramatically easing" underwriting standards; and making borrowers sign large stacks of paperwork without giving them time to read what was being signed, among others. Brown also alleged that Countrywide employees, including loan officers, underwriters, and branch managers, under intense pressure to process a constantly increasing number of loans, consistently misrepresented or obfuscated the fact that borrowers who obtained certain types of loans would experience dramatic increases in monthly payments. Illinois joins in, too Not to be outdone, Illinois AG Lisa Madigan's office filed a similar lawsuit in Illinois' Cook County Circuit Court Wednesday alleging "unfair and deceptive conduct on a large scale in creating, originating, marketing and servicing unnecessarily risky and costly mortgage loans for Illinois homeowners." The Illinois case, however, takes on an interesting twist, alleging that Countrywide escalated its originations of unaffordable and poorly underwritten loans to satisfy its obligations to Wall Street investors as failure rates on Countrywide loans began to escalate in late 2006 and early 2007. "Countrywide created risky and costly loan products and marketed them to borrowers who could not afford them," Madigan said in a press statement. "Countrywide’s unfair lending practices have harmed tens of thousands of borrowers who’ve been placed in unaffordable loans and, as a result, our communities are now being destabilized by a skyrocketing number of home foreclosures." Madigan’s lawsuit asks the court to rescind or reform all Countrywide loans "originated with the use of unfair and deceptive practices," including providing financial relief to borrowers who lost their homes to foreclosure, refinanced, sold, or have loans currently being serviced by Countrywide, "even if that requires Countrywide to repurchase loans from current investor owners." Madigan's office also petitioned the court for a 90 day stay of all Countrywide foreclosures so that her office could review whether the loans involved were tied to the deceptive practices alleged in the complaint. Determined dealmaking The lawsuits would seem to have been timed to throw off a pending vote by shareholders on the proposed merger with North Carolina-based Bank of America Corp. (BAC); under the terms of the deal, BofA will exchange .1822 shares of its own stock for each share of Countrywide, putting the deal at a value of roughly $3 billion Wednesday morning. Shares in Bank of America were trading at $27.30, up 2.5 percent, on the New York Stock Exchange when this story was published. Despite news of fresh legal woes, however, 69 percent of Countrywide's common stock shareholders approved the proposed buyout -- enough to push the deal forward. Countrywide said Wednesday that the BofA merger is expected to be complete by July 1. Disclosure: The author was long CFC and held no positions in BAC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.