Countrywide Closer to Indictment — And Still Making Zero Down-Payment Loans

Countrywide Home Loans is one step closer to possible federal criminal indictment following a bankruptcy judge’s decision to allow the Justice Department wide authority to investigate whether the largest U.S. mortage lender has serially cheated bankrupt borrowers in bankruptcy cases.

Judge Thomas P. Agresti of the U.S. Bankruptcy Court for the Western District of Pennsylvania said U.S. Trustee Kelly Beaudin Stapleton has the power to subpoena documents and question Countrywide officials under oath about questionable actions the lender allegedly took in borrower-bankruptcy cases.

Countrywide had argued that the U.S. trustee had limited authority to investigate specific issues in particular cases or proceedings and could not seek discovery related to general policies and procedures Countrywide followed in its business affairs.

The U.S. Trustee contends that Countrywide filed inaccurate proofs of claim, filed unwarranted motions for relief from the bankruptcy stay, inaccurately accounted for funds, and made unfounded payment demands to debtors after discharge.

According to Judge Agresti’s opinion in In re Countrywide Home Loans Inc., No. 07-00204, 2008 WL 868041 (Bankr. W.D. Pa. Apr. 1, 2008), similar allegations have been raised against Countrywide in at least 293 separate borrower-bankruptcy cases just in the Western District of Pennsylvania.

In addition, Countrywide has been accused of similar abuses against borrowers across the country, and faces additional trustee lawsuits in Georgia, Ohio and Florida.

The judge’s decision in Pennsylvania does not bind other bankruptcy courts, but it could influence judges in other courts as the Justice Department pursues alleged abuses by Countrywide in other states.

In rejecting Countrywide’s claim that allowing the probe would cause chaos in the mortgage industry, the judge wrote that “The U.S. Trustee has made a showing of a common thread of potential wrongdoing.”

“The apparent point of Countrywide’s argument is that recognizing the authority of the U.S. Trustee to conduct these examinations could have the unintended consequence of leading to an unregulated ‘free-for-all,”’ he continued. “The court find’s Countrywide’s argument … to be without merit.”

In 2006 Countrywide financed 20% of all mortgages in the United States.

Countrywide itself narrowly avoided bankruptcy due to its exposure to subprime mortgages when Bank of America agreed to purchase the home mortgage giant in January for $4.2 billion.

Countrywide is still in the business of making home loans, and according to a recent article in Slate.com, it is still making zero down-payment loans.

In some instances, according to the article, Countrywide is foreclosing on properties, then offering new buyers zero down-payment mortgages plus their own free appraisal of the foreclosed property.

According to the Countrywide Foreclosure Blog, Countrywide’s own website currently lists 14,541 bank-owned (REO) properties for sale with a combined asking price of $2,984,273,174.  The largest number of these properties, by far, are in California, with 4,493 properties with a combined asking price of $1,294,972,540.

UPDATE:

For an update on the federal judge’s decision to allow a multi-million dollar shareholders’ lawsuit against Angelo R. Mozilo and other Countrywide executives to proceed, click here.

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3 responses to “Countrywide Closer to Indictment — And Still Making Zero Down-Payment Loans

  1. Countrywide is really a mess. I tried to get my home loan modified, but not so said countrywide. After my debt was reconfigured by countrywide their expert basically told me that I can live off $1080…a month that my payment is not causing a financial hardship. I don’t think Countrywide wants to help consumers who are facing financial hardship and are afraid that they may loss their homes. Countrywide needs to work with the consumers in trying to save people’s homes. Instead homes are continuing to going into foreclosures. I was told that my debts are too far in the negative, now I am told that my debts are too far in the positive. I was also told to get all my debts together and try again, but my suspicion is that it does not matter how or what I try to get my loan modifed, that will never happen. People be aware of those ARM adjustable rates, they are a trap.

  2. In my case countrywide needs to be shut down. i ve been trying to get help from countrywide and they seem not to care. i have done everything to get help and the staff at countrywide are nasty. if you say sometihng they dont want to hear they hang up. like a person name antinio hes needs to get some manners i made a complaint about him and the supervisor told me that’s life, move on.

  3. Angelo, you gave your WORD ! ! !
    By praetorian5

    After the murder of our oldest son and the subsequent financial firestorm that ended in us losing our home to foreclosure,(and this was AFTER, a plan was worked out with C-wide to come current), I spoke with Mr. Mozilo, PERSONALLY, on the phone, at his office…..and the man assured me that although they sold my home illegally, he would personally see to it that we got our home back. Yeah, right! In a pig’s eye. They assigned us a supposed in-house attorney? (somewhere in Santa Monica), who then in turn immediately sent us an unlawful detainer. I immediately filed suit against C-wide and the U/D was rescinded. We asked where to send the pmts and how much until the modification was complete. The attorney told us to hold onto the funds for the initial pmt on the mod, so we did. The mod was introduced in Sep,’08 and was tiered, putting us in a worse situation than we could imagine. Needless to say, we rejected it. Hell, The numbers weren’t even consistent from one page to the next. Anyway, They sought a demurer on the complaint, seven months after it was filed, (isn’t that kind of LATE?), citing non-payment, AFTER they told us to hold the payment until the ink was dry on the modification, and the #@%K&%* judge granted it, without allowing me to speak because although I have been married to my wife for 31 years and the home was purchased with my G.I. bill, and the fact that the title is in her name, I am not a lawyer. Now I have to refile. We are tired. This is the end of our American dream. My question is this….and it is for Mr. Mozilo…….were you just blowing me off when you PROMISED my family we would get our home back, that was taken unethically, and illegally from us? Or were you just passing the buck to the mysterious Dan Whitehead? OR……did you really mean what you said, and this is just some rogue attorney out to put another feather in his cap? My father always told his sons that a MAN’S word is his bond and right now your word is about as good as waterbased mucilage. Mr Mozilo……….WHY?

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