home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.


Judge Rules Against Countrywide on BK Examination

U.S. Trustee wins right to conduct examination

April 4, 2008

By SAM GARCIA


Countrywide Home Loans Inc. failed in its efforts to block an examination by the U.S. Trustee to determine whether the company inflated expenses and other costs in bankruptcy claims.

U.S. Bankruptcy Judge Thomas P. Agresti has authorized the U.S. Trustee to proceed with the examination.

A Chapter 13 bankruptcy trustee filed a motion requesting loan histories from Countrywide for 293 cases. Ten cases were identified where Countrywide engaged in questionable actions or raised issues about the bankruptcy system integrity. These findings prompted the U.S. Trustee to file a Notice of Examination that would require a Countrywide authorized representative to be examined.

The Trustee is seeking documents relating to Countrywide's policies and procedures and to the individual accounts being examined.

In a motion filed in the Pennsylvania consolidated case that seeks loan histories from Countrywide and sanctions against the lender, the U.S. trustee alleged that, in the 293 cases, Countrywide "lost, destroyed or misplaced" more than $515,000 in checks that were to be posted to debtors' accounts. Countrywide also, according to the trustee, "attached impermissible charges, including late fees and attorneys' fees for its unconscionable delay" in posting checks.

In another Pennsylvania bankruptcy case, Countrywide was ordered to pay the U.S. trustee $2,000 as a sanction for its conduct. And in a Florida bankruptcy case, Countrywide was ordered to pay $74,271.33 to the debtors' trust account, representing insurance proceeds received by the lender for repairs to the debtors' home.

The Calabasas, Calif.-based company objected to the Notice of Examination on the grounds that the U.S. Trustee lacked standing to conduct the examination or compel production of the requested documents.

"The mere pendency of a bankruptcy case does not open the door for the [U.S. Trustee] to hale a creditor into an examination room to give sworn testimony and produce documents relating to its general corporate affairs," Countrywide stated in its objection. "The [U.S. Trustee's] powers are not without limit, and Rule 2004 has its bounds. Both would be exceeded exponentially if the Notices of Examination and Subpoenas are not quashed."

But the U.S. Trustee, which handles administrative issues for the bankruptcy courts, shot back with a claim that she has broad legal authority to conduct the examination at issue in the case. She denied being on a fishing expedition and pointed to the identification of inaccurate proofs of claim, unwarranted motions for relief from stay and unfounded demands for payment after bankruptcy discharge.

At issue is the accuracy of escrow account calculations, payment receipts and mortgage arrearages.

The court sided with the U.S. Trustee.

"Therefore, based upon the statutory language, as well as the relevant case law, the court concludes that it is within the power of the [U.S. Trustee] to seek the production of documents and the examination of witnesses pursuant to Rule 2004," the ruling stated. "However, this authority is not unfettered. The court agrees with Countrywide's position that there must be some limitation on this power to prevent it from being abusively exercised. As such, consideration of the appropriate limitations to place on the [U.S. Trustee's] power in the context of this case is necessary for the purpose of determining the extent to which the document production and examination may proceeds."

A recent 48-page report by University of Iowa Associate Professor of Law Katherine Porter alleged mortgage servicers frequently disregard bankruptcy law and submit inadequate or erroneous claims.


Related:

Countrywide BK Claims Probed by U.S. Trustee
Countrywide Financial Corp. is being investigated by a U.S. trustee to determine, among other things, whether it inflated the amount it is owed on bankruptcy claims. Counsel for Countrywide said the actions by the trustee, who has entered more than 16 cases involving lenders in at least five states, are random instances of prosecution without cause.

Servicers Accused of Overstating Loan Balances
Mortgage servicers frequently disregard bankruptcy law and submit inadequate or erroneous claims, a university law professor alleged in a recent 48-page report that indicated lenders and borrowers disagreed on the balance owing in most cases. She suggested illegal fees regularly tacked on to balances without sufficiently identifying the nature of the fees are symptomatic of servicing in general.


Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com.

e-mail: [email protected]


Servicing News | Servicer Ranking | Delinquency Statistics
Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.



SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders