U.S. Trustee Investigating Countrywide For Alleged Abuses In Bankruptcy Cases
By: Scott B. Riddle, Esq.
The New York Times is reporting that Countrywide (NYSE:CFC) is being investigated for possible abuses in Bankruptcy cases. See Foreclosure Charges By Lender Investigated.
The federal agency monitoring the bankruptcy courts has subpoenaed Countrywide Financial, the nation’s largest mortgage lender and loan servicer, to determine whether the company’s conduct in two foreclosures in southern Florida represented abuses of the bankruptcy system.
The subpoenas for Countrywide documents were issued in late October by the United States Trustee after the agency announced an effort to move against mortgage servicing companies that file false and inaccurate claims in foreclosure cases. The inquiries into Countrywide by the trustee’s office, a division of the Justice Department, come as foreclosures are increasing across the country.
In a story reported in the New York Times, a debtor here in the Western District of Pennsylvania was discharged after completing her obligations in a 60 month Chapter 13 Bankruptcy plan. However, as often times happens when one deals with Countrywide, things weren’t as simple as they seemed to be.
The first sign of trouble for the debtor was that Countrywide would not accept the mortgage payments the debtor was trying to make after her discharge. Countrywide was rejecting the payments saying that the debtor was in default.
The debtor then received a notice to foreclose from Countrywide stating that the debtor was in default in her mortgage and owed $4,166. The amount allegedly owed was for the time period the debtor was making regular payments to the Chapter 13 Trustee under the 60 month plan. To justify its position as to the amount owed, Countrywide asserted that it sent letters to the debtor, the attorney for the debtor, and the Chapter 13 Trustee.
However, in a court hearing in Pittsburgh, an attorney for Countrywide told the presiding Judge that the letters in question had been “recreated” by Countrywide to show how the discrepancies arose. Apparently, Countrywide often does this in order to “comply with the bankruptcy laws . . . ”
A discovery schedule has been established so that the Court and the parties can see how Countrywide’s system can create such “recreated” documents