Bankruptcy Sanctioning Standards Ironically Spare Mortgage Lender Bad Faith Sanctions ....

    ... But Do Not Spare It a Reprimand, in a 72 page Decision by a Federal         Judge.

    The complete story of the United States Trustee's Complaints against practices of lenders-litigants in Bankruptcy Court trying to get their money back at any cost is fully explored in Insurance Claims and Bad Faith Law, at www.insuranceclaimsbadfaith.typepad.com.  Here is a recent development, which is also the subject of a parallel post in that space.

  In a 72 page opinion, a Bankruptcy Judge in the United States District Court for the Southern District of Texas has listed many errors by Countrywide Financial Corporation in a borrower's Bankruptcy case, including fees that were allegedly improper or unexplained, a motion to lift a bankruptcy stay that should never have been filed as the Court described it, and negligence.  The Court told Countrywide to reevaluate how it handles the kinds of policies and procedures that were listed in these 72 pages including what the Court itself described as a disregard for professional and ethical obligations.

    However, this misconduct could not be sanctioned as Bad Faith in litigation, said the Court, which felt compelled to apply a standard of "clear and convincing" evidence.  The Court's opinion is so long that it is in two parts, available by linking here:  Download Countrywide_(In_re_Parsley)_decision_(S.D. Tex., Bankr., Opinion Filed 03.05.08).Pages1through40.pdf and here:  Download Countrywide_(In_re_Parsley)_decision_(S.D. Tex., Bankr., Opinion Filed 03.05.08).Pages41to72(end).pdf.

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