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DOJ Challenges Countrywide Bankruptcy
Bank of America, which recently completed its buy of Countrywide, said last week that these types of clauses are commonplace in settlement agreements.
August 11, 2008
Alleging that Countrywide Financial is trying to quiet a critic of the company, the US Department of Justice is challenging a deal the home lender made with a Pittsburgh bankruptcy court.
According to the Wall Street Journal, a nondisparagement clause in the company’s settlement with a court trustee, "may impede, impair or otherwise chill witness testimony in the US Trustee's ongoing investigation of Countrywide," Justice Department lawyers wrote in court documents.
Bank of America, which recently completed its buy of Countrywide, said last week that these types of clauses are commonplace in settlement agreements.
The Journal reports that the trustee, Ronda Winnecour, has battled Countrywide in close to 300 Pittsburgh consumer-bankruptcy cases, accusing it of mishandling payments her office sent to satisfy mortgage debt. Countrywide denied mishandling checks. In answer to criticism of its practices, the company admitted to some errors but said its systems are essentially sound, according to the newspaper.
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