Bankruptcy trustees call out Countrywide for “sustained bad faith”
Posted by: in Stocks Money NewsFiled under: Law, Bank of America (BAC), Countrywide Financial (CFC)
Countrywide Financial (NYSE: CFC) shareholders may be able to take some level of comfort in the fact that apparently they’re not the only ones being treated like crap by the beleaguered mortgage giant.
According to the Associated Press, “U.S. trustees in Georgia, Ohio, and Florida on Thursday asked the 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.”
Walton wrote that “Countrywide’s failure to ensure the accuracy of its claims and pleadings has resulted in an abuse of the bankruptcy process.” The company is accused of filling bankruptcy proceedings with mishandled payments, unexplained or erroneous fees, and inaccurate paperwork.
Courts in Pennsylvania, Texas, and North Carolina have previously imposed punitive damages on the company for misconduct in bankruptcy cases.
The Wall Street Journal reports (subscription required) that the Countrywide deal has been a lightning rod for Bank of America (NYSE: BAC), which is set to close the deal in the third quarter.
The possible legal, regulatory, and financial hassles aside, I think that Bank of America has to wonder what exactly they’re getting here. Countrywide Financial is being acquired presumably for its strong brand and network, but you have to think all these accusations of sleaze and extremely negative media coverage (I’m proud to say I’ve contributed my fair share) are doing a lot to hurt the brand.
And from this latest bit of news, it doesn’t seems like those problems are going away anytime soon.
Permalink | Email this | Comments
