Bankruptcy Law
Judge Permits U.S. Trustee to Investigate Countrywide
Posted Apr 3, 2008, 09:46 am CST
By Debra Cassens Weiss
A federal judge has authorized the U.S. Trustee to investigate whether mortgage processing systems used by Countrywide Financial Corp. have affected “the integrity of the bankruptcy process.”
The decision by U.S. Bankruptcy Judge Thomas Agresti of Pittsburgh is believed to be the first confirming the trustee’s power to investigate systematic abuses of borrowers, the Wall Street Journal reports (sub. req.). The trustee’s office oversees bankruptcy cases and is part of the U.S. Justice Department.
The trustee wants to look into allegations that Countrywide mishandled mortgage payments, miscalculated amounts due, and charged improper fees. The lender maintains that any mistakes were not because of company policies.
Reuters quotes from Agresti’s 50-page opinion. “The U.S. Trustee has made a showing of a common thread of potential wrongdoing," Agresti wrote.
"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 wrote. "The court finds Countrywide's argument ... to be without merit."
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