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
Bankruptcy Watchdogs Seek
Sanctions Against Countrywide
February 29, 2008 5:40 p.m.
In a move that escalates the level of legal trouble faced by Countrywide Financial Corp., federal watchdogs Friday asked courts to sanction the big mortgage lender for alleged abuses of the bankruptcy system.

U.S. trustees in Georgia, Ohio and Florida are asking courts to enjoin "Countrywide's sustained bad faith conduct" in its treatment of distressed consumers trying to save their homes in bankruptcy court, according to a complaint filed by U.S. Trustee Donald F. Walton.

"Countrywide's failure to ensure the accuracy of its claims and pleadings has resulted in an abuse of the bankruptcy process," Mr. Walton, the U.S. trustee for the region that includes Atlanta, wrote in papers filed Friday in the U.S. Bankruptcy Court for the Northern District of Georgia.

An official from Countrywide wasn't immediately able to comment on the cases.

The action by an arm of the U.S. Department of Justice marks a rare concerted effort by the government to rein in Countrywide for behavior that has exasperated consumer attorneys for years: Misapplied mortgage payments, false court filings and unexplained extra fees.

"This is the first case that I know of where the U.S. trustee has actually filed an adversary proceeding in bankruptcy court against a creditor of this type," said O. Max Gardner III, a North Carolina consumer bankruptcy attorney. "The relief that it is asking for is based on a long pattern and practice of behavior that is all too familiar."

In "nine out of 10" Chapter 13 bankruptcy cases, wage-earner bankruptcies where people try to catch up on their bills, Countrywide complicates court proceedings with erroneous legal filings, mishandled payments and fees that are not explained, he said.

"The thing that's different now is that we're finally getting people who should be interested, the U.S. trustee, involved in it," Mr. Gardner said.

Mr. Walton, the U.S. trustee for Georgia, Florida, Puerto Rico and the U.S. Virgin Islands, is seeking sanctions against Countrywide for its behavior in the bankruptcy case of a Georgia couple who filed for Chapter 13 bankruptcy. Mr. Walton says Countrywide falsely accused John and Robin Atchley of defaulting on their mortgage, assessed $2,793 in unexplained fees and kept taking money after the home was paid off.

Countrywide returned the extra payments and dropped threats of foreclosure. However, Mr. Walton said Countrywide added "unnecessary delay and expense" to the bankruptcy process and should not go unpunished.

"Countrywide has acted in bad faith in the conduct of litigation before the court in this case for which the rules are not up to the task of adequately sanctioning," Mr. Walton wrote.

Courts in Pennsylvania, Texas and North Carolina have sanctioned Countrywide and imposed punitive damages for "aggravated and egregious" misconduct in bankruptcy cases that caused problems for courts and consumers.

Countrywide, based in Calabasas, Calif., also faces an inquiry into the suspected mishandling of payments sent by court officials in nearly 300 Pittsburgh bankruptcy cases. In one such case, Countrywide is suspected of fabricating documents in an effort to foreclose on a woman and of breaking into confidential emails sent by Mr. Gardner.

Write to Peg Brickley at
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Good for Max.

Here is the legal definition of "bad faith" for you to compare to your case
and suggest to a lawyer to pursue this kind of case.  It focus' on the
conduct used to steal your home for one thing.

If you can win this issue, the actual damages would be the loss of your home
and punitive damages can run quite high to punish the servicer and or lender.

Even alledging it will cause them to put reserves on your case.

Bad faith

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Bad faith (Latin: mala fides) is a legal concept in which a malicious motive on the part of a party in a lawsuit undermines their case. It has an effect on the ability to maintain causes of action and obtain legal remedies. Generally speaking, courts will not just look at the legal rights of parties in pursuing a transaction or a lawsuit, but will look behind the activity at the motives of the persons attempting to obtain the assistance of the court. If a court feels that the reasons behind the transaction or lawsuit have the effect of abusing the power of the law, or the court, it will generally deny a party the ability to rely on a legal remedy that they will otherwise be entitled to. It is related to the equitable powers of common law courts to look beyond the law.

[edit] Relevance

Bad faith is relevant in the following areas of law:

Transactions that affect creditors - If creditors are denied the opportunity to realize on the proceeds of property that was previously owned by the debtor, they will often look at the motives of the parties involved in a purported sale, primarily when the sale is for little or no consideration. For example, if a spouse puts title to the family home in the other spouse's name before embarking on a risky business venture, this will usually be treated as a good faith attempt to lessen the exposure of his or her family to creditors. However, if the same transaction takes place after a spouse has been sued for a debt, the sale will generally be held void against the creditors, allowing them to look at the equity in the house for satisfaction of debt.

Possession of property - The torts of detinue and conversion allow a person who has lost possession of personal property to regain possession of that property, even if it had been transferred to another after its loss or conversion. However, the court will only order such a remedy if the person with possession of the property obtained it in bad faith - for example that they obtained it for free or for nominal consideration. In other words, a person buying a stereo out of the back of someone's car has no defence to a claim in detinue where a person buying a stereo from a pawnbroker would most likely be able to show that the transaction was made in good faith even if it later turned out the pawnbroker didn't have valid title to the goods.

Punitive damages - If the more powerful party to a transaction refuses to properly deal with its legal obligations and must be sued in order to force it to pay money that is clearly owing, courts will often punish litigants who take the position that the worst thing that can happen after a trial is that they will have to pay the money owed anyway. For example, if a check is sent and cashed in error and it is clear that the person receiving the money had no right to keep it, the court would most likely rule that simply ordering the payment of the money was an insufficient remedy for the plaintiff, who was put through the time and expense of trial for no reason. In Canada, one of the leading cases of this type resulted in a record punitive damages award of $1 million CAD when an insurance company pressed a claim for arson when its own experts and adjusters had come to the conclusion the fire was accidental and the lawyer advised the client that the desperate insured parties would be willing to settle for much less than what they were owed (Whiten v. Pilot Insurance Co., 2002 SCC 18)[1].

Remedies in equity - When a party is seeking an extraordinary remedy such as an injunction or specific performance, the court must be convinced that the party seeking the remedy has no ulterior motive for doing so. If the defending party can show that the complaining party has abused the process or the power of the court, the court will generally deny the remedy even though the complaining party would otherwise be entitled to the relief claimed

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