Senate Panel to Look at Foreclosure Management Practices
If anyone needed proof that default servicing is now headed towards the spotlight, look no further than yesterday's announcement by the Senate Judiciary Committee that it will hold a session focusing on recent high-profile bankruptcy management missteps. The Judiciary Committee's Subcommitree on Administrative Oversight and the Courts will hold a hearing titled "Policing Lenders and Protecting Homeowners: Is Misconduct in Bankruptcy Fueling the Foreclosure Crisis?" The hearing, scheduled for May 6, was called by chairman Charles Schumer (D-NY) -- who has said that he wants legislation enacted to protect borrowers from servicer missteps in and after bankrupcty proceedings. Schumer has invited Countrywide Financial Corp. (CFC) Angelo Mozilo to testify, the New York Times reported Tuesday. Also invited were representatives from McCalla, Raymer, Padrick, Cobb, Nichols & Clark in Atlanta, a creditor's rights law firm and one of the largest such firms in the default servicing industry. Both the law firm and Countrywide have been at the center of a highly-publicized series of case involving the United States Trustee, in which the Trustee has alleged "abuses of the bankruptcy process" by Countrywide and its associated counsel in Georgia, Florida and Ohio. A similar case, a putative class action suit filed in February by a group of borrowers in Texas, was thrown out by a judge in a federal bankruptcy court in Houston this past March. While it's unknown whether Mozilo or McCalla Raymer will be attending the hearing, the New York Times reported that three others will be testifying: Robin Atchley, the borrower at the center of the Countrywide bankruptcy brouhaha in Atlanta, as well as Clifford J. White III, director of the executive office for the United States Trustee, and Katherine M. Porter, an associate professor of law at Iowa University. Porter published a study in 2006 that found half of foreclosures contained "questionable fees." The New York Times covers more details:
"What the hearing is going to show is what an ongoing, awful enterprise some of these companies ran, not just taking advantage of the terms of the mortgage, but when they control the mortgage how they continue to squeeze and squeeze and squeeze," Mr. Schumer, Democrat of New York, said.