Legal News

Subprime Legal: Judge Dings C?wide Settlement Over Alleged Forgeries

By Dan Slater

During a hearing back in December, U.S. Bankruptcy Judge Jeff Bohm chastised Countrywide and its lawyers after the mortgage lender admitted to making numerous errors in a case. “How many times do I have to listen to that before I conclude, ‘You know, there’s got to be some kind of reckoning’ when I keep hearing time after time, ‘we made a mistake, we made a mistake. . . ?’”

Well, on Tuesday, a reckoning of sorts arrived when Tuesday Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh rejected Countrywide’s proposal to settle accusations that it fabricated evidence used in a bid to foreclose on a home, rejecting the “mistake” defense, made by Countrywide. Here’s the WSJ story by Peg Brickley.

Countrywide had requested to settle a dispute with Sharon Diane Hill, a Pittsburgh-area woman who was threatened with foreclosure. Hill was up to date on her payments, but Countrywide threatened to take her home if she didn’t pay thousands more in fees, according to court documents. Countrywide later backed off and offered to pay her lawyers. But Hill said her credit was permanently marred by the foreclosure attempt.

Countrywide, to demonstrate that Hill had been late on her mortgage payments, sent letters to her attorney that referred to changes in escrow requirements that allegedly showed she was delinquent on her loans. But the attorney said he never received the letters and was able to show in court that the letters were phony. Countrywide later said one of its technicians “recreated” them electronically. On Tuesday, Judge Agresti said he wouldn’t approve a settlement until he got to the bottom of Countrywide’s suspected forgeries. He said he was concerned about “the potential effect that a settlement in this case may have in other cases involving Countrywide.”

Full post as published by Law Blog - WSJ.com on May 08, 2008 (boomark / email).