Countrywide, Counsel Getting Slammed 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.

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• 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.

Go here for more on recent Countrywide problems with consumers.