WSJ: Countrywide Probe to Move Forward

April 2, 2008 No Comments »

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Federal Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh today authorized an in-depth investigation by the Office of the U.S. Trustee into Countrywide’s dealings involving bankrupt homeowners, the Wall Street Journal reported.

Attorneys representing the Calabasas, California-based company had argued that the Justice Department unit’s probe exceeded its authority and would have “really staggering” implications for other large banks and lenders.

But Agresti brushed off such claims, noting that the trustee’s office had demonstrated “a common thread of potential wrongdoing” by the lender that warranted such an investigation.

Back in January, Countrywide was accused of fabricating documents related to the bankruptcy case of a Pennsylvania homeowner, raising questions about the business practices of the top U.S. mortgage lender.

The case involved a woman who was allegedly current on her mortgage payments according to court records, but Countrywide stated that she was in default and owed the company $4,166.

According to the Journal, Judge Agresti is overseeing 293 similar cases that involve alleged misconduct by Countrywide.

The under fire mortgage lender faces similar charges throughout the rest of the country as well, and today’s ruling could give other lawsuits legs and cloud the upcoming merger with Bank of America.

Earlier this month, Countrywide voluntarily delayed 103 foreclosure sales scheduled in Texas to address lawsuits alleging it attempted to unlawfully foreclose on borrowers.

The FBI is also looking into Countrywide’s loan origination practices and subsequent securitization of home loans.

(photo: christine592)

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