Bankruptcy Judges Come Down on Countrywide

J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

More federal bankruptcy judges are calling into question the business practices of Countrywide Financial Corp., as Bank of America Corp. prepares to buy the ailing mortgage lender, the Wall Street Journal reported today. According to court documents in a bankruptcy case in Houston, Countrywide didn’t properly credit a borrower’s payments made during bankruptcy but instead applied them to prebankruptcy debt.

During a hearing last month, Bankruptcy Judge Jeff Bohm chastised Countrywide and its lawyers after the company admitted making numerous errors in the case. Countrywide says that it has incurred at least $400,000 in costs associated with the case after having its employees deposed by the U.S. Trustee Program. The agency has been investigating the company’s handling of loan payments and court claims in cases across the country.