Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Here's some inspiring news finally...Just one of the whole bunch though that need to face this type of ruling....No MORE SYMPATHY....GO JUDGES GO!!!


Directors and officers of Countrywide Financial, the beleaguered mortgage lender, must answer shareholder accusations of insider trading and an overall failure to monitor lending practices that led to the company’s collapse, a federal judge in California has ruled.

Rejecting the arguments of Countrywide executives and directors that they were unaware of lax loan operations that led to ballooning defaults, Judge Mariana R. Pfaelzer of Federal District Court in Los Angeles ruled Tuesday that she found confidential witness accounts in the shareholder complaint to be credible and that they suggested “a widespread company culture that encouraged employees to push mortgages through without regard to underwriting standards.”

Plaintiffs also identified “numerous red flags” that would have warned directors of increasingly risky loans made by Countrywide, according to the judge, who rejected a motion to dismiss the suit. “It defies reason, given the entirety of the allegations,” Judge Pfaelzer wrote, “that these committee members could be blind to widespread deviations from the underwriting policies and standards being committed by employees at all levels. At the same time, it does not appear that the committees took corrective action.”

Hundreds of mortgage companies have failed in the last year or so, but few executives or directors have taken responsibility. That makes the ruling significant, said Blair A. Nicholas, one of two lawyers at Bernstein Litowitz Berger & Grossmann representing the plaintiffs.

“It is a critical step enabling Countrywide and its shareholders to hold accountable the officers and directors who looted the company and were responsible for its devastating collapse,” Mr. Nicholas said.

Countrywide shareholders have lost billions of dollars since 2007 when its shares hit a high of $45.03. They closed on Wednesday at $4.85.

“As institutional investors, it is our duty to seek recourse when a company’s directors engage in practices that are not in the best interests of shareholders,” said Christa S. Clark, chief legal counsel of the Arkansas Teacher Retirement System, the lead plaintiff in the case. “We are pleased with the court’s ruling as it enables the shareholders to move forward with our case and remedy this wrong.”

A Countrywide spokesman declined to comment on the ruling.

The plaintiffs in the case said they hoped to recover money for shareholders from Countrywide officials named in the case who sold $850 million in stock from 2004 to 2007. The plaintiffs contend that the directors and officers dumped shares even as the company spent $2.4 billion to repurchase its own stock in late 2006 and early 2007.

The chief executive of Countrywide, Angelo R. Mozilo, has argued that his $474 million in stock sales during the three-year period complied with securities laws under a planned selling program. But he revised the program, known as a 10b5-1 plan, several times, each time increasing the shares to be sold.

As a result, the judge wrote: “Mozilo’s actions appear to defeat the very purpose of 10b5-1 plans,” created to allow corporate insiders to sell stock regularly and without direct involvement.

Gerald H. Silk, who also represents the plaintiffs, said: “Corporate fiduciaries cannot expect to evade liability by blaming a general market downturn when there is specific and systematic misconduct taking place right beneath their noses.”

The suit names 14 current and former directors and officials as defendants; it is known as a derivative action because shareholders of Countrywide are suing its officers and directors on behalf of the company.

Lawyers for the plaintiffs said that they would ask the judge to expedite discovery so that they can get testimony before the proposed purchase of Countrywide by Bank of America takes place. The deal is expected to close in the third quarter.

Senator Charles E. Schumer, Democrat of New York, asked the Federal Trade Commission on Wednesday to investigate whether Countrywide took advantage of borrowers who filed for bankruptcy protection to try to keep their homes.

In the letter to William E. Kovacic, the F.T.C. chairman, Mr. Schumer said, “An investigation by the Federal Trade Commission would help pull the curtain back on a hidden corner of the existing foreclosure crisis, and could help stem the tide of homeowners who are now unnecessarily being forced into bankruptcy and foreclosure.
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Senator Schumer from NY is on the ball now we need to get him to look at Servicers like Litton Loan, etc.
Senator wants FTC to join Countrywide investigation

A top Senate Democrat on Wednesday asked the Federal Trade Commission to join other government and court agencies investigating Countrywide Financial, (CFC) the nation's largest home mortgage lender.

Sen. Charles Schumer, D-N.Y., chairman of the Senate Subcommittee on Administrative Oversight and the Courts, made the request based on what he called "an emerging pattern of apparent misconduct" in Countrywide's treatment of borrowers who seek bankruptcy-court protection.

The request followed a May 6 subcommittee hearing at which witnesses testified that Countrywide and other mortgage lenders abuse the bankruptcy-court system by filing unjustified foreclosures against struggling borrowers, piling on questionable fees and misstating amounts owed. "This behavior has contributed to an industrywide crisis that has harmed homeowners, roiled Wall Street and stalled the economy," Schumer wrote in the request to FTC Chairman William Kovacic.

Schumer wrote that a new FTC investigation, if not already underway, could "help pull the curtain back on a hidden corner of the existing foreclosure crisis."

FTC spokesman Frank Dorman said the agency would not discuss Schumer's request. Countrywide did not respond to requests for comment.

But Steve Bailey, Countrywide's chief executive for loan administration, testified at last week's Senate subcommittee hearing that his company has an error rate of less than 1% for "mistakes that adversely impact a borrower." Bailey also wrote that allegations that mortgage servicers abuse the bankruptcy process "generally are inaccurate."

However, the mortgage giant already faces several investigations. In a Pennsylvania ruling last month, Bankruptcy Court Judge Thomas Agresti authorized a probe of Countrywide's treatment of bankrupt borrowers. While stressing there was no proof of impropriety, Agresti wrote that a bankruptcy trustee had presented "a common thread of potential wrongdoing" involving Countrywide.

The judge also last week dismissed a proposed settlement of accusations that Countrywide fabricated documents in a bankruptcy dispute with Sharon Diane Hill, a Pennsylvania woman threatened with foreclosure. Agresti said he wanted to know more about the documents.

In a Securities and Exchange Commission filing this month, Countrywide said the FBI could neither confirm nor deny that it was investigating the firm.

Schumer, in his FTC request, said the Hill case demonstrated "Countrywide's questionable behavior." He also cited:

•A Texas bankruptcy case in which a judge called Countrywide's filings "clearly legal nonsense" and imposed a $75,000 sanction on the company's law firm.

•A North Carolina case in which Countrywide was sanctioned for attempting to repossess a home — even removing or damaging family photos and other personal property — despite a bankruptcy-court filing that stayed the foreclosure.

•At least one case in which Countrywide allegedly failed to credit borrowers' payments, "thus leaving the individuals stuck in bankruptcy or in debt."

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"Senator Schumer from NY is on the ball now we need to get him to look at Servicers like Litton Loan, etc."

You are absolutely 100% correct on the ball.  I have been complaining about Litton to the FTC for awhile; also to the over site committee having jurisdiction over them and everyone else for that matter.

So far it has went on deaf ears.   

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