Countrywide Financial Scandal Emerges

It looks like a scandal is developing with lending company Countrywide Financial. The company allegedly “recreated” letters that led to foreclosure and bankruptcy of several borrowers. Over 300 consumers are involved in bankruptcy cases that involve the home loan lender:

The Countrywide Financial Corporation fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records show, raising new questions about the business practices of the giant mortgage lender at the center of the subprime mess.

The documents — three letters from Countrywide addressed to the homeowner — claimed that the borrower owed the company $4,700 because of discrepancies in escrow deductions. Countrywide’s local counsel described the letters to the court as “recreated,” raising concern from the federal bankruptcy judge overseeing the case, Thomas P. Agresti.

“These letters are a smoking gun that something is not right in Denmark,” Judge Agresti said in a Dec. 20 hearing in Pittsburgh.

The emergence of the fabricated documents comes as Countrywide confronts a rising tide of complaints from borrowers who claim that the company pushed them into risky loans. The matter in Pittsburgh is one of 300 bankruptcy cases in which Countrywide’s practices have come under scrutiny in western Pennsylvania.

Just another case of unchecked corporations behaving badly.

Fred Soto is an Attorney and Entrepreneur from the Silicon Valley.
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