Countrywide proposes new Pa. lending settlement
NEW YORK (Reuters) - Countrywide Financial Corp and a U.S. bankruptcy trustee have submitted a new proposal to convince a federal judge to resolve claims over alleged abusive practices by what was once the nation's largest mortgage lender.
The proposed terms were filed on Wednesday with the U.S. Bankruptcy Court in the Western District of Pennsylvania, which is overseeing cases of nearly 300 Countrywide borrowers in foreclosure in that region. Countrywide is now owned by Bank of America Corp (BAC.N), the second-largest U.S. bank by assets.
Wednesday's filing followed Judge Thomas Agresti's August 14 rejection of an earlier settlement agreement. Agresti had said that while the parties had made progress in trying to help the borrowers, there was "no real impetus" to complete the process.
Ronda Winnecour, who as the Chapter 13 trustee in Pittsburgh oversees the bankruptcy process in that area, had accused Countrywide of making inaccurate claims, filing needless paperwork, demanding improper fees and charges, and losing or destroying more than $500,000 in checks from homeowners in foreclosure.
According to a joint filing by Countrywide and Winnecour, the settlement now calls for the trustee to audit borrower accounts at her office's expense and to ensure that Countrywide is cashing checks properly and assessing no improper fees.
Borrowers would also receive itemized payoff statements, and "be assured that each and every fee or charge added to their account has been fully disclosed and either permitted by court order or absorbed by Countrywide," the filing showed.
Countrywide and the trustee also agreed to delete from the earlier agreement a "non-disparagement" clause, which the U.S. Justice Department had said could impede regulatory probes of the lender. The FBI is also investigating Countrywide.
In addition, record-keeping matters between Countrywide and the trustee would be resolved within 120 days of court approval, Wednesday's filing shows.
Agresti has scheduled an October 2 status conference.
The Office of the U.S. Trustee is an arm of the Justice Department that oversees the bankruptcy system.
Bank of America shares were down $1.51, or 4.6 percent, at $31.45 in Thursday afternoon trading on the New York Stock Exchange, as major U.S. stock indexes declined broadly. The bank's shares began the year at $41.26.
Countrywide was based in Calabasas, California, and Bank of America is based in Charlotte, North Carolina.
