Facing growing criticism of its conduct toward homeowners in bankruptcy court, Countrywide Financial Corp. said it would improve its practices at a hearing before a U.S. Senate panel, the Wall Street Journal reports.
An executive at Countrywide, which has agreed to be acquired by Bank of America Corp., told a U.S. Senate Judiciary subcommittee Tuesday that the company is taking steps to address concerns that misconduct in bankruptcy proceedings by mortgage companies is exacerbating the nation's foreclosure crisis.
Bankruptcy judges have found that the Calabasas, Calif., lender and its lawyers failed to appear at court-authorized depositions, charged debtors with unsubstantiated or erroneous fees and improperly credited a borrower's payments made during bankruptcy to prebankruptcy debt, which isn't allowed.
Countrywide also has faced probes and lawsuits by a unit of lawyers at the Justice Department that monitors the bankruptcy system, the U.S. Trustee Program, which earlier this year sued the company in three states, accusing it of "bad-faith conduct" and "abuse" of the courts against debtors, and has found that the company wrongfully tried to foreclose on borrowers.
Steve Bailey, Countrywide's chief executive for loan administration, said the company plans to hire an independent auditor to select random samples of loans in bankruptcy to review the accuracy of the company's accounting for payments by borrowers. If the company made mistakes that hurt borrowers, it will compensate them, he said.
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