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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Nye Lavalle
Countrywide accused of false claims

Bankruptcy rumors sink stock

By Laurence Viele Davidson

Bloomberg News

January 9, 2008

Countrywide Financial Corp., the largest U.S. mortgage lender, has been ordered to provide documents and testimony to federal officials investigating possible false mortgage claims against bankrupt South Florida homeowners.

Countrywide has until later this month to provide the documents and in February must submit to questioning under oath by the trustee.

Also, trading in Countrywide shares was halted Tuesday at 1:06 p.m. and resumed at 1:15 p.m., after the company said there was no substance to swirling bankruptcy rumors. The stock hit a 52-week low of $5.05 in New York Stock Exchange trading after the trading halt. Countrywide fell $2.17 to close at $5.47.

In December, U.S. Bankruptcy Judge Paul Hyman in West Palm Beach told Countrywide to turn over internal documents relating to how the company calculates its claims to the U.S. trustee, a Justice Department official who monitors bankruptcies. Countrywide is appealing Hyman's order.

It's the second such case in Florida and part of a national investigation by bankruptcy trustees of lenders, including Countrywide, in at least three other states, Pennsylvania, Texas and Arizona. The trustees want to know if the lenders are making false claims against bankrupt homeowners or using questionable proof to make them pay. U.S. personal bankruptcies rose 40 percent last year, according to the National Bankruptcy Research Center.

"As a general principle, if it is judicially determined that lenders are intentionally attempting to rip off their customers with false or fraudulent proofs of claim, that would have serious consequences for lenders," U.S. Bankruptcy Judge A Jay Cristol, who's presiding over a similar case in Miami, said Tuesday in an interview.

Countrywide is appealing Cristol's decision last month to allow trustees to subpoena records and obtain testimony in the bankruptcy of Manuel Del Castillo, a lawnmower repair man. The trustee is investigating whether mortgage claims against Del Castillo may be overstated.

That case, and the bankruptcy of William and Joyce Chadwick of Boca Raton are being used by trustees to examine Countrywide's claims against bankrupt homeowners. Countrywide made a claim for almost $101,000 against the Chadwicks, who filed for Chapter 13 protection from creditors in October 2005.

In testimony before a U.S. House of Representatives committee in October, Cristol said he was dissatisfied with the trustees' efforts to press lenders for details to assure claims against homeowners were valid.

Also in December, in another case, Countrywide was accused in Pittsburgh bankruptcy court of creating a record after the fact to make it appear as if the company had notified a homeowner and her attorney of the amount owed on her mortgage. The documents were offered after the customer objected to the amount Countrywide claimed she owed, according to a court transcript.

According to court records, U.S. Bankruptcy Judge Thomas Agresti told a lawyer for Countrywide he was "having trouble with these re-created letters that purport to be sent to a number of parties at a prior date well into the past and created at a subsequent date to show or represent at least at first blush, the state of a record which didn't really exist as such."

Countrywide spokesman Rick Simon could not be reached for comment. U.S. Trustee spokeswoman Jane Limprecht wouldn't comment on the investigation.

Investors pushed Countrywide down 87 percent in the past year after concern that the home lender was suffering from a cash shortage. The company tapped emergency credit lines last year and got a bailout from Bank of America Corp. as the worst housing slump in 16 years fueled speculation that Countrywide itself might land in bankruptcy court.

Countrywide has said it has adequate capital to conduct its business and predicted in October that it will be profitable this year. The company posted its first loss in 25 years during the third quarter of 2007.

Staff Writer Paul Owers contributed to this story.
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Digger

Countrywide to Turn Over Records, Testify in Bankruptcy Probe

Countrywide Financial Corp., the largest U.S. mortgage lender, was ordered to provide documents and testimony to federal officials probing possible false mortgage claims against bankrupt Florida homeowners.

In December, U.S. Bankruptcy Judge Paul Hyman in West Palm Beach, Florida, told Countrywide to turn over internal documents relating to how the company calculates its claims to the U.S. trustee, a Justice Department official who monitors bankruptcies. Countrywide has until later this month to provide the documents and in February must submit to questioning under oath by the trustee. Countrywide is appealing Hyman's order.

It's the second such case in Florida and part of a national probe by bankruptcy trustees of lenders, including Countrywide, in at least three other states -- Pennsylvania, Texas and Arizona. The trustees want to know if the lenders are making false claims against bankrupt homeowners or using questionable proof to make them pay. U.S. personal bankruptcies rose 40 percent last year, according to the National Bankruptcy Research Center.

``As a general principle, if it is judicially determined that lenders are intentionally attempting to rip off their customers with false or fraudulent proofs of claim, that would have serious consequences for lenders,'' U.S. Bankruptcy Judge A. Jay Cristol, who's presiding over a similar case in Miami, said yesterday in an interview.

Countrywide is appealing Cristol's decision last month to allow trustees to subpoena records and obtain testimony in the bankruptcy of Manuel Del Castillo, a lawnmower repairman. The trustee is investigating whether mortgage claims against Del Castillo may be overstated.

That case, and the West Palm Beach bankruptcy of William and Joyce Chadwick, are being used by trustees to examine Countrywide's claims against bankrupt homeowners.

The case is In Re Chadwick, 05-37014, U.S. Southern District of Florida (West Palm Beach).

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The trustees want to know if the lenders are making false claims against bankrupt homeowners or using questionable proof to make them pay.

As a general principle, if it is judicially determined that lenders are intentionally attempting to rip off their customers with false or fraudulent proofs of claim, that would have serious consequences for lenders,'' U.S. Bankruptcy Judge A. Jay Cristol



EMC has been doing it for years and years.  Are they investigating them?

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