Countrywide's shareholders yesterday approved Bank of America's proposed acquisition of the troubled mortgage lender amid a storm of litigation alleging Countrywide engaged in unfair and deceptive lending practices both in Illinois and California.

A report by Financial Times shows that Countrywide and Angelo Mozilo, chief executive, were named in civil suits filed yesterday by the attorneys-general of the two states, raising fresh questions over the extent of Bank of America's exposure to Countrywide's potential legal and regulatory liabilities when the deal closes.

According to the suits, the lender marketed risky and expensive loan products to thousands of borrowers who could not afford them and who subsequently lost their homes. They further claim that Countrywide used deceptive practices, including low introductory "teaser" rates, to entice borrowers into adjustable-rate loans without adequately informing them that the payments would balloon in later months.

In a meeting that lasted less than 20 minutes at Countrywide's California headquarters, holders of more than 69% of Countrywide's outstanding shares voted in favour of the deal with Bank of America. The transaction is expected to close on July 1.

Other reports suggest that Countrywide is currently facing multiple class-action suits from borrowers and investors, as well as investigations of both its underwriting and servicing practices by the justice department, Federal Bureau of Investigation and the US Trustee, which monitors bankruptcy courts.

The legal probes range from investigations into overly aggressive fee policies for borrowers who fall behind on payments to whether the company intentionally overlooked evidence of fraud by borrowers seeking mortgage loans.