Judge Sanctions Countrywide, Says It Disobeyed Court Rules
By AMIR EFRATI
February 2, 2008 - Wall Street Journal
Countrywide Financial Corp., which has been under criticism for its conduct in bankruptcy cases of borrowers, has been sanctioned by a federal judge in Idaho who said the ailing lender disobeyed court rules.
Earlier this month, U.S. bankruptcy judge Jim Pappas ordered two subsidiaries of Countrywide and a business partner to pay $2,250 for failing to properly respond to borrowers' requests for documents and failing to appear at court-authorized depositions in a case where Countrywide was alleged to have tried to foreclose on the borrowers' home in violation of bankruptcy rules.
Calabasas, Calif.-based Countrywide, which this year agreed to be purchased by Bank of America Corp., has been the subject of scrutiny by federal judges and regulators over the company's handling of bankruptcy proceedings.
In a statement, Countrywide said the company "has procedures designed to ensure prompt notification of any bankruptcy, as well as procedures to proactively search bankruptcy dockets nationwide to identify new filings that may affect its portfolio. As to the Scott case, we are not in a position to comment on pending litigation matters."
The Idaho borrowers, Jason and Ginger Scott of Twin Falls, got a home-equity loan from Countrywide in 2004.
The couple filed for Chapter 13 bankruptcy in late 2005 and Countrywide was notified, but the company allegedly continued to attempt to collect payments on the loan in violation of bankruptcy rules.
Write to Amir Efrati at firstname.lastname@example.org