Loan Modification

Countrywide Financial Corp., the mortgage giant that's now part of Bank of America, routinely didn't bother to transfer essential documents for loans sold to investors, an employee testified.

The testimony ? which a New Jersey bankruptcy judge cited in dismissing a B of A claim against a debtor ? could complicate attempts by the company to foreclose on soured loans that Countrywide originated and sold in better times.

The B of A employee's admission that the lender customarily held on to promissory notes could also undermine the industry's position that document transfers to securitization trusts are fundamentally sound.