Fraud? Not Countrywide! No way!

Posted January 8, 2008

2007 was filled with finger pointing left and right. So many lenders pointed the fingers at mortgage brokers as the bad guys that “pushed people into higher rate loans” to make more money. In reality, most mortgage brokers simply sold the products that were available. After all, if a customer would qualify for a conforming 30 year fixed at 6%, why in the world would that customer ever take a 2 year arm at 8%? That thought process and blaming doesn’t even make sense. So why all the blame?

It was simply a diversion. 2008 will be the year when things are unvieled. We will see where the problems came from and hopefully brokers will be seen as the professionals they really are! Take this story below as an example. Three major issues about Countrywide pop up here… 1, they falsified documents (aka fraud), 2, they came back after a homeowner for more money and foreclosure after the homeowner’s bankrutpcy case was finalized (and she made her payments as agreed), and 3, they (Countrywide Retail that is - not the brokers) are being accused by many of their borrowers for being pushed in to bad loans.

Here is the story By GRETCHEN MORGENSON at the New York Times (as published by the Houston Chronicle 1/8/2008):

The Countrywide Financial Corp. fabricated documents related to the bankruptcy case of a Pennsylvania homeowner, court records indicate, 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 Agresti.

“These letters are a smoking gun that something is not right in Denmark,” 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.

Agresti said that discovery should proceed so that those involved in the case could determine how Countrywide’s systems might generate such documents.

Rick Simon, a spokesman for the lender, said: “It is not Countrywide’s policy to create or ‘fabricate’ any documents as evidence that they were sent if they had not been. We believe it will be shown in further discovery that the Countrywide bankruptcy technician who generated the documents at issue did so as an efficient way to convey the dates the escrow analyses were done and the calculations of the payments as a result of the analyses.”

The documents were generated in a case involving Sharon Diane Hill, who filed for Chapter 13 bankruptcy protection in March 2001 to try to save her home from foreclosure.

After meeting her mortgage obligations under the 60-month bankruptcy plan, Hill’s case was discharged and officially closed on March 9, 2007. Countrywide, the servicer on her loan, did not object to the discharge.

But exactly one month later, Hill received a notice of intention to foreclose from Countrywide, stating that she was in default and owed the company $4,166. Court records show that the amount claimed by Countrywide was from the period during which Hill was making regular payments under the auspices of the bankruptcy court.

I certainly hope that the fiasco of the 2007 “mortgage meltdown” is done. I expect it may take some time to recover, but with the turning of the New Year to 2008, its a great time to buy a home in Charlotte. And with a commitment to professional mortgage lending, you can be assured that the Ed Nailor Mortgage Team is here to help!

Category Posted in Commentary, Mortgages