How To Punish Big Mortgage Company? Full Disclosure In All Ohio Cases Of Funds Received

31 Aug How To Punish Big Mortgage Company? Full Disclosure In All Ohio Cases Of Funds Received

Many of the mortgage companies are being scrutinized by bankruptcy court judges for the sloppy procedures displayed by the mortgage companies’ proofs of claims filed in Chapter 13 bankruptcy cases.Critics charge that the banks/mortgage companies are covering up fraud with the assistance of our government as explained by my colleague Chip Parker, Florida consumer attorney. So, it is pleasant when a government officialtakes a stand for the consumer. Recently, a Ohio judge found that Countrywide, now Bank of America, deserved to be sanctioned for its shoddy record-keeping practices. The bankruptcy judge just needed to find the right punishment….

The right punishment turned out to be the implementation of a standardized form which MUST be used by Countrywide/BOA in every proof of claim filed by Countrywide in Ohio. The form discloses (and must be accurate disclosure) all monies received and spent by the mortgage company on behalf of the loan. The judge hopes to prevent future misconduct by forcing the use of this form.

One might say: “What’s the big deal?” Weren’t they in trouble for a form anyway? Well, the difference here is the “teeth” in the judge’s order:

For each new proof of claim filed by Countrywide, its successors or assigns before this Court, acopy of the
completed Worksheet shall be attached to the proof of claim at the time of filing. In addition, within 75 days from the
date of this Order, Countrywide, its successors and assigns are ordered to complete the Worksheet for all
previously filed proofs of claim in cases currently pending on this Court’s docket and file a copy of
the completed Worksheet as a supplement to the previously filed proof of claim. If Countrywide,
its successors and assigns fail to use and properly complete the Worksheet in support of their claims,
the Court will award monetary sanctions against Countrywide, its successors and/or assigns
including, but not limited to, a minimum of $300 for attorney’s fees incurred by the debtor or trustee
in contesting the claims of Countrywide, its successors and/or assigns, as well as any other
compensatory damages that the debtor might prove.
Counsel who seek sanctions against Countrywide, its successors and/or assigns as the result
of the failure to use and properly complete the Worksheet should file a motion with the Court and
serve the motion on Countrywide, its successors and/or assigns, the Debtor, the Trustee and Dean
Wyman of the UST’s office for Region 9.
In re O’Neal 07-51027 (McDermott v. Countrywide), District of Ohio

Therefore, Countrywide must amend every proof of claim, file the form, make sure the form is right, or pay at least $300 for every wrong proof of claim. Considering how many proofs of claim are filed each year by Countrywide, this could get interesting…..

thanks to Bob Lawless at www.creditslips.org for alerting me to this wonderful solution/opinion.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
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