The Justice Department will be allowed to question Countrywide Financial Corp. executives under oath and subpoena company documents to determine whether the lender abused borrowers and the bankruptcy process. A federal judge ruled that the department’s Office of the U.S. Trustee, which monitors bankruptcy proceedings, “has made a showing of a common thread of potential wrongdoing” by Countrywide in a sample of 293 cases. The nearly 300 cases filed in Pittsburgh include allegations that Countrywide sought improper fees or payments from homeowners and otherwise violated Bankruptcy Court orders and regulations.
Some borrowers have accused the company of threatening them with foreclosure even after they made payments under plans approved by the Bankruptcy Court to shield them from subsequent efforts to collect the debts. Countrywide has acknowledged errors in handling some debts, but has denied any systematic effort to thwart bankruptcy protections. The company had argued in court that the U.S. trustee’s requests amounted to an illegal “fishing expedition” outside the agency’s scope. Fortunately, the judge didn’t buy that argument and approved the probe!
Source: New York Times
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