Bankruptcy Judge Gives Green Light To U.S. Trustee On Countrywide Inquiry

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.

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• 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 more on recent Countrywide problems with consumers.