Countrywide Going Down?

Shares of Countrywide plunged today on reports that the company was nearing bankruptcy. The stock recovered somewhat since the company put out a statement saying that "There is no substance to the rumor that Countrywide is planning to file for bankruptcy, and we are not aware of any basis for the rumor that any of the major rating agencies are contemplating negative action relative to the company." But that's not the only bad press the company has gotten today. Federal bankruptcy judge Thomas P. Agresti had this to say about documents "recreated" by Countrywide that are part of a bankruptcy proceeding in Pennsylvania: "These are a sign that something is not right in Denmark". This is big trouble for Countrywide.

Judge Agresti said that discovery should proceed so that those involved in the case could determine how Countrywide’s systems might generate such documents. A spokesman for the lender, Rick Simon, 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, a homeowner in Monroeville, Pa. Ms. Hill 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, Ms. Hill’s case was discharged and officially closed on March 9, 2007. Countrywide, the servicer on her loan, did not object to the discharge; court records from that date show she was current on her mortgage. But one month later, Ms. 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 Ms. Hill was making regular payments under the auspices of the bankruptcy court. They included “monthly charges” totaling $3,840 from November 2006 to April 2007, late charges of $128 and other charges of almost $200. In May, Countrywide sent Ms. Hill another notice stating that her loan was delinquent and demanding that she pay $4,715.58.

Countrywide is going down. And in my opinion it couldn't happen to a more deserving company. Too bad that CEO Mozilo is going to avoid the worst of it. Scum!