Federal overseer seeks sanctions against Countrywide

NEW YORK (Reuters) - A federal official appointed to oversee bankruptcy proceedings involving customers of Countrywide Financial Corp CFC.N accused the largest U.S. mortgage lender of abusing the country's bankruptcy system.

According to papers filed on Thursday in U.S. bankruptcy court for the Northern District of Georgia, U.S. trustee Donald Walton urged the court to sanction Countrywide for "engaging in bad faith conduct that abused the judicial process."

Walton said there also were complaints against Countrywide filed in Ohio and Florida "to address Countrywide's sustained bad faith conduct in failing to ensure the accuracy of its claims and pleadings in attempting to obtain money or property from debtors and/or the bankruptcy estates."

Countrywide said it does not comment on pending litigation.

Walton is seeking sanctions against Countrywide on behalf of John and Robin Atchley, a Georgia couple who filed for Chapter 13 bankruptcy. Among the misdeeds Countrywide is accused of, Walton said the lender wrongly accused the Atchleys of defaulting on their mortgage and continued to accept payments from them after the loan was paid off.

"Countrywide improperly accepted payments from the Chapter 13 trustee notwithstanding that the Atchleys had already paid Countrywide's claim in full. Countrywide had previously executed a satisfaction of mortgage acknowledging that there was no longer any legal basis for it to receive such payments," according to one of the counts cited in the court documents.

Countrywide agreed last month to be acquired by Bank of America Corp (BAC.N) in a deal originally valued at about $4 billion.

(Reporting by Martinne Geller; editing by Carol Bishopric)