|
LEARN MORE
IMAGE SOURCE: WikiMedia Commons / Sacramento homes/ Brian242 |
A federal judge has given the green light to an investigation into whether Countrywide Finiancial Corp. abused and defrauded borrowers, a key component of this country's failing mortgage industry.
Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh gave the okay to a Justice Department arm, the Office of the U.S. Trustee, that polices the bankruptcy courts.
Countrywide, the nation's biggest mortgage lender, is protesting saying a probe could have ''staggering implications'' for other big mortgage lenders and turn into a free-for-all.
But Judge Agresti believes that there is enough evidence, a "common thread of potential wrongdoing'' in several bankruptcy cases involving Countrywide.
"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," he writes in a 50-page opinion.
Among the allegations - Countrywide added improper fees to mortgage payments, fabricated documents in one case and ignored court orders while pursuing homeowners in trouble. Countrywide denies it mistreats homeowners.
Seven percent of Countrywide borrowers are in default. The company has joined a national program to freeze subprime adjustable rate loans, many given out to consumers with bad credit.
Judge Agresti has before him 293 cases allegations of miscouduct by Countrywide in the U.S. Bankruptcy Court in Pittsburgh, Pennsylvania. His decision could influence other judges considering other such cases around the country.
The Justice Department has similar charges against the Calabasas, Calif., company in courts nationwide.
In January, Countrywide agreed to be acquired by Bank of America Corp for $4.2 billion. #