Evidence Of Countrywide's Missteps In Servicing Home Mortgages Litter Court Files Around The Country

A story was run recently in The Atlanta Journal Constitution on a fight Countrywide Home Loans faces with the U.S. Trustee in a Georgia Federal bankruptcy court for alleged mistakes and/or misconduct during the course of one particular consumer bankruptcy case. The story also describes the wrath directed towards Countrywide by judges around the country as a result of its "missteps" committed both in the servicing of home loans and in its conduct in the courts:

• A Texas judge, Jeff Bohm, rebuked Countrywide, Atlanta-based McCalla Raymer and a Texas law firm in a 72-page ruling [Judge Bohm's two-part ruling - Part I and Part II]. He found fault with each of the three parties' handling of a case in which Countrywide sought permission to foreclose on a homeowner who was up to date on payments. The Texas law firm hired by McCalla Raymer was singled out by the judge. "Above all else, what kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter?" Bohm wrote.

***

• In Ohio and Florida, the U.S. Trustee's office has filed complaints in the past month seeking sanctions against Countrywide. In Ohio, Countrywide sought payments in bankruptcy court from a homeowner who had already paid off Countrywide. In Florida, Countrywide tried three times to foreclose on a homeowner who no longer owed Countrywide any money on the property.

• Countrywide has already been sanctioned in other cases. A judge in Pennsylvania sanctioned the lender for trying to foreclose on a couple in that state who had made required payments "like clockwork," according to the judge.

• Countrywide's Texas law firm was hit with a $75,000 sanction for its behavior in a case that included court filings that were "erroneous" and "clearly legal nonsense."

• A judge in North Carolina sanctioned Countrywide for twice changing the locks on a house that it had sought to repossess, even though the foreclosure had been stopped by a bankruptcy filing. Countrywide's agents disposed of the family's Christmas ornaments, family pictures and a christening dress when it improperly seized the home. "It is difficult to imagine more deliberate, unwarranted and egregious conduct," Judge Catharine R. Carruthers wrote when sanctioning Countrywide.

For the article, see Couple lose home in Countrywide dispute, but may yet win (Feds seek sanctions, say lender abused bankruptcy laws).

For an article examining mortgage companies frequent non-compliance with law in consumer bankruptcy cases, see Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter University of Iowa - College of Law.

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Countrywide Facing Fight With U.S. Trustee After "Missteps" With One Georgia Homeowner In Bankruptcy

In Georgia, The Atlanta Journal Constitution reports on the story of a Cherokee County couple, Robin & John Atchley, who reportedly lost their home after a fight with Countrywide Home Loans.

• Unlike many families caught up in the mortgage meltdown, the Atchleys did not lose their house because they couldn't make their mortgage payments. They lost it because of the expense and frustration of trying to force Countrywide to comply with bankruptcy laws that are supposed to offer a safe harbor to committed homeowners.

• The massive California-based lender and its Atlanta law firm, McCalla Raymer, went to bankruptcy court twice within three months seeking permission to foreclose, claiming the Atchleys had not paid the mortgage. But the Atchleys' lawyer produced receipts in both cases proving that the Atchleys had indeed made their payments.

• The problems didn't end there. The family says that Countrywide repeatedly billed them for inappropriate fees and charges that pushed the cost of the mortgage beyond their reach. About the time their children hesitated to ask for lunch money, Robin and John Atchley decided enough was enough.

• They sold the house and paid Countrywide a balance that they thought was well above what they really owed. Their children got in the car with their suitcases and the family moved in with Robin's parents until they could save enough money to rent a house nearby.

***

• The Atchleys moved on months ago. But someone with considerable resources decided recently to take up the fight. The Justice Department's United States Trustee in Atlanta attracted national attention in late February by going to court asking for sanctions against Countrywide for its actions in the Atchley case.

For the rest of this lengthy article, see Couple lose home in Countrywide dispute, but may yet win (Feds seek sanctions, say lender abused bankruptcy laws).

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Class Action Against Countrywide Alleges Abuse Of Hurricane Victims Behind In House Payments

According to a press release from the James, Hoyer, Newcomer & Smiljanich, PA Law Firm:

• In response to Countrywide Home Loans refusal to fulfill promises made to Gulf Coast hurricane victims, the James Hoyer Law Firm announced [last month] the filing of a new class action lawsuit against the mortgage company. The suit was filed in the United States District Court in the Southern District of Mississippi. The suit alleges Countrywide took advantage of these disaster victims by offering them mortgage deferrals with no penalties attached and then reneging on that promise.

***

• After Hurricanes Rita & Katrina, Countrywide offered 90-day mortgage payment deferrals to homeowners affected by the devastation and in many cases 6-month deferrals. Countrywide represented this as a good deed to help people in their time of suffering and even issued a press release to promote its actions. Homeowners were told by agents over the phone their deferred payments could be tacked onto the end of their mortgages. They were assured they would not face penalties like late fees, interest and reports to the credit bureaus. Countrywide went so far as to tell homeowners who wanted to pay, not to do it. In some cases, they even returned checks. Struggling hurricane victims accepted the offer of help, some reluctantly, when assured they would not be economically penalized by late fees, penalties or credit reporting.

• When homeowners followed up later to resume payments, they discovered Countrywide was reneging on its promise. The company said it could not add the payments to the end of the loan, without penalty, after all. Instead, Countrywide told homeowners they would either have to pay the lump sum owed immediately or face a loan restructuring which would cause them to pay thousands of dollars more over the life of their loan.

• The suit, filed on behalf of victims in Mississippi, is in addition to two suits already pending in Louisiana and Texas.

For the press release, see Countrywide Class Action Suit: Hurricane Victims Feel Betrayed.

Go here for:

• ABC News report on Countrywide Hurricane Victims (video only),
• Countrywide Loan Investigation (video only).

To view the lawsuit, drop me a line at HomeEquityTheft@yahoo.com and I'll e-mail it to you (be sure to put "Brumfield v. Countrywide Home Loans" in the "Subject" line).

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Countrywide's Mozilo "Disgusted" By Homeowners' "Form Letter" Pleas For Help; Sets Off Furor

In California, The Los Angeles Times reports on the furor set off by Countrywide chief Angelo Mozilo when he clumsily hit "Reply" instead of "Forward" on an email from a homeowner seeking help in saving his house:

• Apparently clicking "reply" when he meant to hit "forward," Countrywide Financial Corp. Chairman Angelo Mozilo ignited an online furor Tuesday by describing a mortgage customer's plea for help as a "disgusting" example of form letters inundating the Calabasas home lender. Mozilo's e-mail rocketed back to the customer, Daniel Bailey Jr., who had asked Countrywide to modify the terms of his loan so he wouldn't lose his home of 16 years.

• Much of the language in Bailey's message to Countrywide was borrowed from a form letter available at the website LoanSafe.org, a coaching service for troubled borrowers. Bailey, who says he operates a photo studio, posted his e-mailed exchange with the lender on a LoanSafe forum.

• His original e-mail was sent to 20 Countrywide addresses, including Mozilo's. Such mass e-mails have overwhelmed e-mail boxes at Countrywide, disrupting its operations and prompting Mozilo's heated response, the company said. "This is unbelievable," Mozilo said in his e-mail. "Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting." The reply touched off debate on housing websites.

For more, see Countrywide Financial Chairman Angelo Mozilo's e-mail sets off a furor (He calls a borrower's plea for help a "disgusting" example of form letters inundating the Calabasas mortgage lender).

Go here for the e-mailed exchange with Mozilo on a LoanSafe forum.

See also, The Wall Street Journal Blog: Oops! Countrywide Chairman Mozilo’s ‘Disgusting’ Email.

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Legal Attacks Against Countrywide Continue; Accused Of Running Up Late Fees, Misrepresnting Terms Of Forbearance Agreements

In Orange County, Texas, the Southeast Texas Record reports:

• Jason Byrd of the Snider & Byrd law firm has filed two new suits against Countrywide Home Loans in Orange County District Court. After Hurricane Rita cut a swath through Southeast Texas, Countrywide granted several Golden triangle residents a reprieve from making monthly mortgage payments. Now more than two years later, Countrywide is seeking to collect on those back payments. Orange County residents Alton and Susan Pursley along with Joey and Jennifer Bergeron claim Countrywide misrepresented the conditions of the payment suspension program and is now unfairly requesting a lump sum payment plus additional late fees.

***

• The home owners in the suit allege Countrywide's actions are not only in violation of the Texas Deceptive Trade Practices Act [DTPA] and a breach of contract, "but are patently deceptive."

For more, including a list of violations of DTPA allegedly committed by Countrywide, see Suits against Countrywide for charging late fees piling up.

For other stories on Texas lawsuits against Countrywide by the same law firm, see:

• (4-14-08) Countrywide sued again for allegedly misrepresenting payment program,
• (4-02-08) Another Jefferson County resident sues Countrywide for misrepresenting payment program.

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Countrywide Postpones 103 Foreclosure Sales In Response To Suit Accusing It Of Foreclosing On Homeowners Current On House Payments

The Wall Street Journal reports:

• Countrywide Financial Corp. voluntarily postponed 103 foreclosure sales scheduled for yesterday in Texas in connection with a private lawsuit that accuses it of trying to foreclose on homeowners who emerged from bankruptcy and were current on their mortgages. That allegation, which the company denies, is also one of the issues raised by a federal bankruptcy watchdog in suits it filed against the company last week. [...] The U.S. Trustee Program last week sued the company in three states for "bad-faith conduct" and "abuse" of the courts. In Florida, the U.S. trustee alleged that Countrywide tried to foreclose on a home after the borrowers had eliminated the company's mortgage through a bankruptcy proceeding four years earlier.

For more, see Countrywide Delays Foreclosure Sales (subscription may be required; if no subscription, try here, then click link for story, then "refresh" browser if needed).

See also, Countrywide Is Sued Again by U.S. Overseer.

• [U.S. Trustee Donald] Walton said that after a judge ruled Countrywide did not have a valid lien, it nonetheless pursued claims for nearly four years, including an attempt to foreclose, causing unnecessary delay and expense. Countrywide voluntarily dismissed its foreclosure complaint in October, the trustee said. “Countrywide’s failure to ensure the accuracy of its claims and pleadings has resulted in an abuse of the bankruptcy process and has prejudiced and will continue to prejudice, parties in interest in the bankruptcy cases in which Countrywide participates,” Mr. Walton said.

For the Florida U.S. Trustee's lawsuit against Countrywide, see Walton v. Countrywide Home Loans Inc.

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Pittsburgh Bankruptcy Judge Gives U.S. Trustee The Go-Ahead To Question Countrywide Execs, Subpoena Company Docs

In Pittsburgh, Pennsylvania, The Associated Press reports:

• A federal judge ruled the Justice Department can subpoena documents and question Countrywide Financial Corp. executives under oath to determine whether the lender abused borrowers and the bankruptcy-court process. U.S. Bankruptcy Judge Thomas Agresti said "it certainly has not been proven that Countrywide did anything wrong," but noted a bankruptcy trustee "has made a showing of a common thread of potential wrongdoing" in several cases. The cases are a representative sample of nearly 300 Pennsylvania bankruptcy cases involving Countrywide borrowers. The potential wrongdoing warrants further inquiry by a bankruptcy trustee on behalf of the Justice Department, Agresti said.

***

• The company has acknowledged errors in handling some debts, but has denied any systematic effort to thwart bankruptcy protections to collect money. Some bankrupt borrowers, however, have accused the company of threatening them with foreclosure even after they made payments under court-approved bankruptcy plans that were meant to shield them from Countrywide's subsequent efforts to collect the debts. Agresti's 50-page ruling was issued late Tuesday in Pittsburgh. [...] Agresti is overseeing 293 cases filed in Pittsburgh that include allegations that Countrywide sought improper fees or payments from bankrupt homeowners and otherwise violated bankruptcy court orders and regulations.

For more, see Judge OKs fed subpoenas of Countrywide.

See also, Reuters: Judge OKs probe into Countrywide practices.

Go here for Judge Agresti's ruling.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

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Countrywide, Law Firms Show Disregard For Professional, Ethical Obligations Of Legal Profession, Judicial System, Says Judge; Declines Sanctions

The New York Times reports:

• The Countrywide Financial Corporation, the largest American mortgage lender, did not show “bad faith” in the handling of a Texas homeowner’s mortgage and will not be sanctioned merely for unprofessional and unethical conduct, a federal judge ruled on Wednesday. Countrywide and two law firms it used showed “a disregard for the professional and ethical obligations of the legal profession and judicial system,” Judge Jeff Bohm of Federal District Court said in ruling on a request by a Justice Department official to consider punishing the company for its conduct. But to impose sanctions, Judge Bohm wrote, he would have had to find “clear and convincing evidence of conduct that is in bad faith, vexatious, wanton or undertaken for oppressive reasons.”

***

• “In Texas, homesteads are sacrosanct,” the judge said in a ruling that traced how Countrywide’s corporate culture led to mistakes including a failure to properly record some payments made by [a Texas homeowner]. [...] The judge also found fault with the law firms, saying their flat-fee rate had led to a “corrosive ‘assembly line’ culture of practicing law.”

For more, see Judge Lectures Countrywide but Decides Not to Punish It in Texas Mortgage Case.

See also, Reuters: US judge won't punish Countrywide for botched case.

To view the court ruling, in which the presiding bankruptcy judge carefully rips apart Countrywide's attorneys (probably "must reading" for anyone who believes they were screwed over by Countrywide or any other loan servicer), see: In re: William Allen Parsley:

• Part I,
• Part II.

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Race Discrimination Alleged In Subprime Predatory Lending Lawsuit Filed In Boston; Class Action Status Sought

The Boston Globe reports:

• "Three African-American mortgage borrowers from Boston accused Countrywide Home Loans Inc. of racial discrimination in a federal lawsuit yesterday, saying the nation's largest home lender charged them more for subprime mortgages than it charged white borrowers in similar financial situations. The lawsuit ... contended Countrywide violated federal housing discrimination laws because the black homeowners in Boston paid higher fees to the network of agents that generate Countrywide's new customers. The company, the suit said, uses an "unchecked, subjective surcharge" that adds to the total costs of loans for its customers, and black borrowers, it contended, paid more than whites. The suit seeks class-action status and more than $100 million to reimburse black customers of Countrywide and its subprime subsidiary, Full Spectrum Lending Inc., including about 10,000 in Massachusetts."

This lawsuit, filed by Massachusetts attorney Gary Klein on Thursday in a Boston Federal Court, comes on the heels of a suit filed on Wednesday by the NAACP in a Los Angeles, California Federal Court in which it sued a dozen subprime lenders for "systematic racism," charging blacks were 30 percent more likely to pay higher interest rates than whites (see NAACP suit targets mortgage lenders - Rights group alleges whites offered better terms than blacks on home loans).

Reportedly, similar litigation alleging discrimination in predatory lending practices against Argent Mortgage Co. and Wells Fargo Bank is also pending in Cleveland, Ohio (see Sue The *astards! - What To Do About Mortgage Brokers And Lenders Who Don't Play Fair?).

Last December, the New York Attorney General reached a settlement with Countrywide in which the company must monitor its lending practices to prevent discrimination against blacks and Latinos (see New York AG Press Release - 12-5-06).

For more, see Borrowers sue subprime lender, allege race bias (Countrywide denies blacks were charged more in fees).

For a copy of the Boston Federal lawsuit, see Miller, et al. vs. Countrywide, et al.

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Countrywide Settlement Offer Rejected In Alleged Phony Docs Case

In Pittsburgh, Pennsylvania, The Wall Street Journal reports:

• A bankruptcy judge has rejected Countrywide Financial Corp.'s proposal to settle accusations that it fabricated evidence used in a bid to foreclose on a home, saying he wants to know more about the alleged false documents. Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh on Tuesday dismissed the company's request to settle a dispute with Sharon Diane Hill, a Pittsburgh-area woman who was threatened with foreclosure by the country's largest home lender.

***

• Details of the settlement proposal were filed under seal, which Judge Agresti said was unjustified. He also said the settlement documents were deficient because they failed to reveal what Ms. Hill's lawyers found out about the alleged fabricated evidence.

***

• On Tuesday, Judge Agresti said he wouldn't approve a settlement until he got to the bottom of Countrywide's suspected forgeries. He said he was concerned about "the potential effect that a settlement in this case may have in other cases involving Countrywide."

For more, see Judge Rejects Countrywide Plan To Settle Suit on Foreclosure Bid.

See also, Subprime Legal: Judge Dings C’wide Settlement Over Alleged Forgeries.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

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Suit Alleges KB Home, Countrywide Conspiracy With Appraisers To Inflate Home Prices, Class Action Status Sought

In Los Angeles, California, The Associated Press reports:

• Two California couples are suing KB Home (KB) and mortgage lender Countrywide Financial Corp., claiming the companies schemed with real estate appraisers to inflate prices paid for homes as the housing market began to tank. [...] The plaintiffs, Deborah and Lonnie Bolden, and David and Dolores Contreras, all residents of Live Oak, are seeking unspecified restitution as well as compensatory and punitive damages. They also want class-action status to cover KB Home customers in California who obtained financing through Countrywide and closed on their purchases between Aug. 1, 2005, and July 31, 2006. In the lawsuit, the couples claim prospective home buyers were presented with false or misleading data on previously sold homes in order to justify higher asking prices on new purchases.

For more, see Lawsuit claims KB Home, Countrywide inflated home prices.

See also, San Francisco Chronicle: A Court Case That Could Be A Sign of the Times (3-21-08).

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Countrywide Fabricated Documents In Consumer Bankruptcy Case, Says Court Transcript

The New York Times reports:

• The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess. The documents — three letters from Countrywide addressed to the homeowner — claimed that the borrower owed the company $4,700 because of discrepancies in escrow deductions. Countrywide’s local counsel described the letters to the court as “recreated,” raising concern from the federal bankruptcy judge overseeing the case, Thomas P. Agresti. “These letters are a smoking gun that something is not right in Denmark,” Judge Agresti said in a Dec. 20 hearing in Pittsburgh.

***

• O. Max Gardner III, a lawyer in North Carolina who represents troubled borrowers, says that he routinely sees lenders pursue borrowers for additional money after their bankruptcies have been discharged and the courts have determined that the default has been cured and borrowers are current. Regarding the Hill matter, Mr. Gardner said: “The real problem in my mind when reading the transcript is that Countrywide’s lawyer could not explain how this happened.”

For more, see Lender Tells Judge It ‘Recreated’ Letters.

For additional documents in this case, see:

• Allegedly bogus letters from Countrywide,
• Transcript of Courtroom Exchange on the allegedly bogus Countrywide Letters.

Go here for other posts on the Countrywide matter in the Pittsburgh federal bankruptcy court.

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For more on the alleged misconduct and sloppiness by lenders and servicers against homeowners in the context of consumer bankruptcy cases, go here to download Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter - University of Iowa - College of Law. questionable mortgage servicing practices tactics yak

Housing Activists Express Displeasure With Countrywide Exec

In Cleveland, Ohio, The Associated Press recently recounted a February, 2006 incident in which a group of over 40 consumer activists went to the home of a regional vice president at Countrywide Financial Corp. to express their displeasure with him and his company's home loans:

• Folks on Humphrey Hill Drive were still waking up on the icy Saturday morning the shark hunters came to town. They rounded the suburban traffic circle in a pair of rented school buses after a half-hour ride from far more modest neighborhoods, rumbling to a stop at the Garmone family's driveway. Forty-two caffeinated Clevelanders piled out, their leaders carrying bullhorns.

• Their quarry, Mike Garmone — a regional vice president at Countrywide Financial Corp., the nation's largest mortgage lender — didn't answer his door. So they deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card — thousands of 2 1/2-inch plastic sharks — flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep.

For more, see Activists Bare Teeth Over Foreclosures.

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More On The Boston Alleged Discrimination / Subprime Lending Lawsuit

The lawsuit filed by three African-American mortgage borrowers accusing Countrywide Home Loans Inc. of racial discrimination in a Boston Federal Court last Thursday also names as defendants Countrywide Bank (a division of Treasury Bank, N.A.), Countrywide Correspondent Lending, Full Spectrum Lending, Inc., Loans For Residential Homes Corp., and Summit Mortgage LLC.

Representing the plaintiffs is attorney Gary Klein with the Boston, Massachusetts consumer protection law firm Roddy Klein & Ryan, the Chicago, Illinois law firm Miller Law LLC, the Long Island firm of Lerach Coughlin Stoia Geller Rudman & Robbins LLP, of Melville, New York, and the Boston office of the firm Hagens Berman Sobol Shapiro LLP, based in Seattle, Washington.

For a copy of the lawsuit, see Miller, et al. vs. Countrywide, et al.

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More On Alleged Fraudulent Claims By Countrywide In Consumer Bankruptcy Cases

In South Florida, the South Florida Sun Sentinel reports:

• In December, U.S. Bankruptcy Judge Paul Hyman in West Palm Beach told Countrywide to turn over internal documents relating to how the company calculates its claims to the U.S. trustee, a Justice Department official who monitors bankruptcies. Countrywide is appealing Hyman's order. It's the second such case in Florida and part of a national investigation by bankruptcy trustees of lenders, including Countrywide, in at least three other states, Pennsylvania, Texas and Arizona. The trustees want to know if the lenders are making false claims against bankrupt homeowners or using questionable proof to make them pay. U.S. personal bankruptcies rose 40 percent last year, according to the National Bankruptcy Research Center.

• "As a general principle, if it is judicially determined that lenders are intentionally attempting to rip off their customers with false or fraudulent proofs of claim, that would have serious consequences for lenders," U.S. Bankruptcy Judge A Jay Cristol, who's presiding over a similar case in Miami, said Tuesday in an interview.

For more, see Countrywide accused of false claims (Bankruptcy rumors sink stock) (When link expires, try here for the same story).

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Go here , go here , and go here for posts on questionable mortgage servicing practices.

For more on the alleged misconduct and sloppiness by lenders and servicers against homeowners in the context of consumer bankruptcy cases, go here to download Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter - University of Iowa - College of Law. questionable mortgage servicing practices tactics yak

Countrywide Steered Homeowners Into Risky Loans, Says Lawsuit; Class Action Sought

In Los Angeles, California, The Associated Press reports:

• Several people who took on home loans from Countrywide Financial Corp. are suing the company, claiming they and other borrowers were steered unnecessarily into taking on risky loans with built-in payment hikes, which ultimately led them to go bankrupt or lose their homes. The seven plaintiffs filed an amended complaint Friday against the Calabasas-based company and several of its subsidiaries. Among the allegations are claims that Countrywide tried to “induce as many borrowers as possible into expensive and dangerous subprime loans, because such loans are the most lucrative for Countrywide.” The lawsuit, which was originally filed in U.S. District Court in Los Angeles in September, seeks unspecified damages and class-action status.

For more, see Countrywide Financial steered borrowers wrong.

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"Assembly Line" Lawyering, Culture Condoning Lying To The Court In Foreclosure Cases Has Bankruptcy Judge Wondering

The Wall Street Journal Law Blog reports:

• Does flat-fee pricing foster assembly-line lawyering? That’s what U.S. bankruptcy judge Jeff Bohm suggested in a decision, entered yesterday, in a consumer bankruptcy case involving Countrywide and a Texas homeowner. While Judge Bohm declined to enter sanctions against Countrywide and its lawyers from two firms — Barrett Burke and McCalla Raymer — he wrote: “This fixed-fee business model appears to have been an overwhelming financial success. . . . Meanwhile, the profession has suffered from the ever decreasing standards that firms like Barrett Burke and McCalla Raymer have heretofore promoted. This demise must stop.”

• The judge called problems at the firms’ culture “disconcerting” and described what he called the firms lack of care for accuracy and failure to communicate with clients. “[W]hat kind of culture condones its lawyers lying to the court and then retreating to the office hoping that the Court will forget about the whole matter.” While “perfection” he said is “too much to demand, preparedness and candor are not.”

For more, see Foreclosure Legal Work: A Shoddy, Assembly-Line Practice?

For an article examining mortgage companies frequent non-compliance with law in consumer bankruptcy cases, see Misbehavior and Mistake in Bankruptcy Mortgage Claims, by Katherine M. Porter University of Iowa - College of Law.

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Illinois AG To Tag Countrywide, Mozilo With Civil Suit Related To Shaky Loans; Will Seek To Modify, Rescind Mortgages Made Thru Deceptive Practices

The New York Times reports:

• The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.

• The lawsuit, which is expected to be filed on Wednesday in Illinois state court, accused Countrywide and Mr. Mozilo of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised “no closing costs loan.” Countrywide also created incentives for its employees and brokers to sell questionable loans by paying them more on such sales, the complaint said.

• In reviewing one Illinois mortgage broker’s sales of Countrywide loans, the complaint said the “vast majority of the loans had inflated income, almost all without the borrower’s knowledge.”

For more, see Illinois To Sue Countrywide.

See also:

• Crain's Chicago Business: AG Madigan to sue Countrywide Financial for fraud (Illinois AG is seeking a judgment that will order Countrywide to rescind, reform or modify all of its mortgages that were obtained by the company’s alleged deceptive practices. She also wants restitution for borrowers who lost their homes due to Countrywide’s practices),
• The Associated Press: Ill. AG to sue Countrywide over lending practices.

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Countrywide Subpoenaed; Possible False Foreclosure Claims Against Homeowners Being Investigated

Buried in an article in today's South Florida Sun-Sentinel is the following blurb:

• The U.S. Trustee, 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 South Florida represented abuses of the bankruptcy system.

• One of the inquiries involves Manuel Del Castillo and Maria E. Pena, Miami borrowers who filed for protection last May under Chapter 13 of the bankruptcy code. In July, Countrywide Home Loans filed a claim, saying that the borrowers owed almost $279,000. In the second case, the trustee has asked for documents relating to Countrywide's claim for almost $101,000 against William and Joyce Chadwick, borrowers in Boca Raton, who filed for Chapter 13 protection in October 2005. The borrowers in both cases objected to Countrywide's claims of what was owed.

Source: Business Briefing (4th thru 6th paragraph) (11-28-07).

See also, Foreclosure Charges by Lender Investigated (New York Times - 11-28-07) (may require subscription; if no subscription, try here).

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For more on allegedly false claims being made by home lenders and mortgage servicing companies both in bankruptcy and non-bankruptcy proceedings, see:

• Borrowers Face Dubious Charges in Foreclosures (New York Times; may require subscription; if no subscription, try here),
• Bankruptcy Trustees Taking Action Against Dishonest Lenders, (Warren Reports On The Middle Class),
• Questionable Mortgage Servicing Practices Coming To Light In Bankruptcy Cases (11-6-07 post).

Go here , go here , and go here for posts on questionable mortgage servicing practices. questionable mortgage servicing practices tactics yak

Illinois AG Help Line Flooded With Calls Since Filing Countrywide Lawsuit

In Illinois, the Naperville Sun reports:

• The Illinois attorney general's office is encouraging homeowners with a Countrywide Financial Corp. loan to seek professional help if they're questioning the terms of their loan. Illinois Attorney General Lisa Madigan this week filed a lawsuit in Cook County Circuit Court against the nation's largest mortgage lender and servicer, claiming the company used deceptive practices to lure borrowers into unaffordable loans.

***

• A spokesman with Madigan's office said Thursday that consumers with a 30-year fixed mortgage should not be alarmed, but carefully reviewing all documents of the loan is recommended. "Make sure you actually have that fixed mortgage," spokesman Natalie Bauer said.

***

• The attorney general's office also has provided a homeowners referral help line, 866-544-7151, which officials say has been inundated with calls.

For more, see Madigan advises home buyers to review Countrywide loans.

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