Countrywide Settlement Could Thwart Investigation
A settlement reached between Countrywide Financial Corp. and a bankruptcy trustee in Western Pennsylvania could affect an investigation into the company’s mishandling of payments from bankruptcy trustees across the country.
Roberta DeAngelis, acting U.S. Bankruptcy Court Trustee for Delaware, New Jersey and Pennsylvania, filed court papers asking to modify an agreement proposed to resolve allegations that Countrywide lost or destroyed checks and then charged late fees and legal costs to 293 bankrupt Pittsburgh-area home owners.
The company agreed in June to pay $325,000 to settle claims filed by the Chapter 13 Trustee for Western Pennsylvania, Rhonda Winnecour. DeAngelis objects to a “non-disparagement” provision in the agreement that prevents both sides from criticizing each other.
DeAngelis’ office wrote “The non-disparagement provision is over-broad and may impede, impair or otherwise chill witness testimony in the United States Trustee’s ongoing investigation of Countrywide or in current or anticipated litigation against Countrywide.”
U.S. Bankruptcy Judge Thomas Agresti must approve the settlement agreement before it can take effect.
Countrywide has been sued by trustees in other states, including Georgia and Florida, who claim the lender pursued false claims in bankruptcy courts.
The Calabasas, California based mortgage giant was bought last month by Bank of America for $2.5 billion.
In court filings last year, Winnecour sought to compel Countrywide to provide loan histories in 293 cases and asked for sanctions against the company for losing or destroying checks paid by homeowners in foreclosure.
In those filings, Winnecour said she believes Countrywide attached non-permissible late fees and attorneys’ charges to debtors’ bills because of its delay in cashing and posting the trustee’s checks.
Countrywide acknowledged errors in handling some debts, but denied any systematic effort to thwart bankruptcy protections to collect money.
Under the terms of the settlement, Countrywide agreed to reconcile its records with the trustee’s in regards to the amounts owed them by the 293 borrowers. If the figures were not in agreement, Countrywide could either change its figures to agree with Winnecour’s or show reason why her numbers were inaccurate.
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