Mortgage Meltdown: Lender Practices Investigated by U.S. Trustee

April 3, 2008

Court Approves Review of Countrywide Practices

PHILADELPHIA (Dow Jones/AP) — A federal judge has authorized an examination of the mortgage processing systems of the lending giant Countrywide Financial by bankruptcy investigators seeking evidence that the company systematically abuses borrowers.

Judge Thomas P. Agresti of the Federal Bankruptcy Court in Pittsburgh on Tuesday approved an inquiry into “the impact of Countrywide’s bankruptcy procedures on the integrity of the bankruptcy process” by the Office of the United States Trustee, a Justice Department arm that polices bankruptcy filings.

Judge Agresti dismissed Countrywide’s protests that authorizing an investigation by the trustee’s office could have “staggering implications” for other big mortgage lenders by starting an investigatory “free for all.”

He said an investigation was warranted because the trustee’s office had demonstrated “a common thread of potential wrongdoing” in several bankruptcy filings involving Countrywide.

The trustee’s office has asserted that it needed to look into accusations that Countrywide had chronically mishandled mortgage payments, pumped up bills with improper fees and charges and ignored court orders while pursuing troubled consumers.

Countrywide has acknowledged some errors. But it denies that mistreatment of homeowners is a feature of its mortgage processing backroom systems.

Judge Agresti is presiding over 293 bankruptcy cases that involve accusations of misconduct by Countrywide. The accusations include claims that the lender slapped improper fees on bankrupt homeowners.

2 Responses

  1. Looks like the lenders are going to have to finally face the reality that you reap what you sow

Leave a Reply

%d bloggers like this: