U.S. Trustees Seek Countrywide Sanctions, Allege Widespread Abuses
In a highly unusual action, U.S. trustees in three states are seeking sanctions against Countrywide Financial Corp., contending that the major mortgage lender has abused the bankruptcy process by making inaccurate filings and imposing unauthorized fees.
The rare concerted filings today by U.S. trustees in Florida, Georgia and Ohio ask federal bankruptcy judges to enjoin what one refers to as “Countrywide’s sustained bad-faith conduct,” reports the Wall Street Journal (sub. req.). The mortgage lender’s inaccurate claims and filings abuse the bankruptcy process, U.S. Trustee Donald F. Walton also says in his complaint in the Northern District of Georgia.
“This is the first case that I know of where the U.S. trustee has actually filed an adversary proceeding in bankruptcy court against a creditor of this type,” says North Carolina attorney O. Max Gardner III, who handles consumer bankruptcy cases. However, such conduct by Countrywide, he claims, is “all too familiar.” Countrywide routinely complicates Chapter 13 cases with mishandled payments, unexplained fees and erroneous filings, he says.
A Countrywide representative was not immediately available for comment, the newspaper stated.
