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H Zernik
DN: cn=Joseph H Zernik, o,
ou,
email=jz12345@earthlink.
net, c=US
Location: La Verne,
California
Date: 2009.10.17 09:04:37
-07'00'
The news that were the direct cause of the collapse of Countrywide and the notice of take
over on January 11, 2008.
3) December 20, 20008 Case Conference Transcript in Borrower Sharon Dianne Hill,
Pittsburgh, PA (01-22574) ………………. 07
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10/17/2009 The Indiana Law Blog: Law - Mortgag…
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Don 't m i ss th i s, especi al l y i f y ou do an y con su m er ban kru ptcy work. It i n v ol v es l en ders pu rsu i n g "borrowers for addi ti on al
m on ey after th ei r ban kru ptci es h a v e been di sch arged," a n ot u n com m on si tu ati on . It al so tou ch es on m ortgage serv i cers wh o
di scard borrowers' m on th l y pay m en ts an d th en decl are th ei r m ortgages "del i n qu en t" so th at th ey m ay i m pose extra fees. Oh ,
an d y es, i t al so cov ers l en ders wh o "recreate" l etters th ey cl ai m to h av e sen t i n th e past.
"Le nde r Te lls Judge I t ‘ Re cre ate d’ Le tte rs" i s th e h eadl i n e to a l on g story today by Gretch en Morgen son of th e NY Ti mes. Som e
qu otes:
Th e Cou n try wi de Fi n an ci al Corporati on fabri cated docu m en ts rel ated to th e ban kru ptcy case of a
Pen n sy l v an i a h om eown er, cou rt records sh ow, rai si n g n ew qu esti on s abou t th e bu si n ess practi ces of th e
gi an t m ortgage l en der at th e cen ter of th e su bpri m e m ess.
“Th ese l etters are a sm oki n g gu n th at som eth i n g i s n ot ri gh t i n Den m ark,” Ju dge A gresti sai d i n a Dec. 20
h eari n g i n Pi ttsbu rgh .
Th e em ergen ce of th e fabri cated docu m en ts com es as Cou n try wi de con fron ts a ri si n g ti de of com pl ai n ts from
borrowers wh o cl ai m th at th e com pan y pu sh ed th em i n to ri sky l oan s. Th e m atter i n Pi ttsbu rgh i s on e of 300
ban kru ptcy cases i n wh i ch Cou n try wi de’s practi ces h av e com e u n der scru ti n y i n western Pen n sy l v an i a.
A spokesm an for th e l en der, R i ck Si m on , sai d: “It i s n ot Cou n try wi de’s pol i cy to create or ‘fabri cate’ an y
docu m en ts as ev i den ce th at th ey were sen t i f th ey h ad n ot been . We bel i ev e i t wi l l be sh own i n fu rth er
di scov ery th at th e Cou n try wi de ban kru ptcy tech n i ci an wh o gen erated th e docu m en ts at i ssu e di d so as an
effi ci en t way to con v ey th e dates th e escrow an al y ses were don e an d th e cal cu l ati on s of th e pay m en ts as a
resu l t of th e an al y ses.”
Th e docu m en ts were gen erated i n a case i n v ol v i n g Sh aron Di an e Hi l l , a h om eown er i n Mon roev i l l e, Pa. Ms.
Hi l l fi l ed for Ch apter 13 ban kru ptcy protecti on i n March 2001 to try to sav e h er h om e from forecl osu re.
A fter m eeti n g h er m ortgage obl i gati on s u n der th e 60-m on th ban kru ptcy pl an , Ms. Hi l l ’s case was di sch arged
an d offi ci al l y cl osed on March 9, 2007. Cou n try wi de, th e serv i cer on h er l oan , di d n ot object to th e di sch arge;
cou rt records from th at date sh ow sh e was cu rren t on h er m ortgage.
Bu t on e m on th l ater, Ms. Hi l l recei v ed a n oti ce of i n ten ti on to forecl ose from Cou n try wi de, stati n g th at sh e
was i n defa u l t an d owed th e com pan y $4,166.
A l awy er represen ti n g Ms. Hi l l i n h er ban kru ptcy case, Ken n eth Stei dl , of Stei dl an d Stei n berg i n Pi ttsbu rgh ,
wrote Cou n try wi de a few weeks l ater stati n g th at Ms. Hi l l h ad been deem ed cu rren t on h er m ortgage du ri n g
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th e peri od i n qu esti on . Bu t i n May , Cou n try wi de sen t Ms. Hi l l an oth er n oti ce stati n g th at h er l oan was
indianalawblog.com/…/law_mortgage_… 1/2
10/17/2009 The Indiana Law Blog: Law - Mortgag…
del i n qu en t an d dem an di n g th at sh e pay $4,715.58. * * *
Ju sti fy i n g Ms. Hi l l ’s arrears, Cou n try wi de sen t h er l awy er copi es of th ree l etters on com pan y l etterh ead
addressed to th e h om eown er, as wel l as to Mr. Stei dl an d Ron da J. Wi n n ecou r, th e Ch apter 13 tru stee for th e
western di stri ct of Pen n sy l v a n i a.
Th e Cou n try wi de l etters were dated Septem ber 2003, October 2004 an d March 2007 an d sh owed ch an ges i n
escrow requ i rem en ts on Ms. Hi l l ’s l oan . “Th i s l etter i s to adv i se y ou th at th e escrow requ i rem en t h as ch an ged
per th e escrow an al y si s com pl eted today ,” each l etter began .
Bu t Mr. Stei dl tol d th e cou rt h e h ad n ev er recei v ed th e l etters. Fu rth erm ore, h e n oti ced th at h i s address on th e
fi rst Cou n try wi de l etter was n ot th e l ocati on of h i s offi ce at th e ti m e, bu t an address h e m ov ed to l ater. N ei th er
di d th e Ch a pter 13 tru stee’s offi ce h av e an y record of recei v i n g th e l etters, cou rt records sh ow.
Wh en Mr. Stei dl di scu ssed th i s wi th Lesl i e E. Pu i da, Cou n try wi de’s ou tsi de cou n sel on th e case, h e sai d Ms.
Pu i da tol d h i m th at th e l etters h ad been “recreated” by Cou n try wi de to refl ect th e escrow di screpan ci es, th e
cou rt tran scri pt sh ows. Du ri n g th ese di scu ssi on s, Ms. Pu i da redu ced th e am ou n t th at Cou n try wi de cl ai m ed
Ms. Hi l l owed to $1,500 from $4,700.
Un der qu esti on i n g by th e ju dge, Ms. Pu i da sai d th at “a processor” at Cou n try wi de h ad gen erated th e l etters to
sh ow h ow th e escrow di screpa n ci es arose. “Th ey were n ot offered to prov e th at th ey h ad been sen t,” Ms. Pu i da
sai d. Bu t sh e al so sai d, u n der qu esti on i n g from th e cou rt, th at th e l etters di d n ot carry a di scl ai m er
i n di cati n g th at th ey were n ot actu al correspon den ce or th at th ey h ad n ev er been sen t. ***
“I ju st, I ca n ’t get ov er wh at I’m bei n g tol d h ere abou t th ese recrea ti on s,” Ju dge A gresti sai d, “an d wh at th e
pu rpose i s or was an d wh at was i n ten ded by th em .” * * *
Ms. Wi n n ecou r sai d i n cou rt fi l i n gs th at sh e was con cern ed th at ev en as Cou n try wi de h ad m i spl aced or
destroy ed th e ch ecks, i t l ev i ed ch arges on th e borrowers, i n cl u di n g l ate fees an d l egal costs. A spokesm an i n
h er offi ce sai d sh e wou l d n ot com m en t on th e Hi l l case.
O. Max Gardn er III, a l awy er i n N orth Carol i n a wh o represen ts trou bl ed borrowers, say s th at h e rou ti n el y sees
l en ders pu rsu e borrowers for addi ti on al m on ey after th ei r ban kru ptci es h av e been di sch arged an d th e cou rts
h av e determ i n ed th at th e defau l t h as been cu red an d borrowers are cu rren t. R egardi n g th e Hi l l m atter, Mr.
Gardn er sai d: “Th e real probl em i n m y m i n d wh en readi n g th e tran scri pt i s th at Cou n try wi de’s l awy er cou l d
n ot expl ai n h ow th i s h appen ed.”
Th e NYT al so prov i des l i n ks to copi es of th e recreated l etters, an d th e 21-page tran scri pt of th e cou rt exch an ge on th e
Cou n try wi de l etters.
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10/17/2009 Lender Tells Judge It ‘Recreated’ Lette…
January 8, 2008
The Country wide Financial Corporation fabricated docum ents related to the bankruptcy case of a Pennsy lv ania
hom eowner, court records show, raising new questions about the business practices of the giant m ortgage lender at
the center of the subprim e m ess.
The docum ents — three letters from Country wide addressed to the hom eowner — claim ed that the borrower owed the
com pany $4 ,7 00 because of discrepancies in escrow deductions. Country wide’s local counsel described the letters to
the court as “recreated,” raising concern from the federal bankruptcy judge ov erseeing the case, Thom as P. Agresti.
“These letters are a sm oking gun that som ething is not right in Denm ark,” Judge Agresti said in a Dec. 2 0 hearing
in Pittsburgh.
The em ergence of the fabricated docum ents com es as Country wide confronts a rising tide of com plaints from
borrowers who claim that the com pany pushed them into risky loans. The m atter in Pittsburgh is one of 3 00
bankruptcy cases in which Country wide’s practices hav e com e under scrutiny in western Pennsy lv ania.
Judge Agresti said that discov ery should proceed so that those inv olv ed in the case, including the Chapter 1 3 trustee
for the western district of Pennsy lv ania and the United States trustee, could determ ine how Country wide’s sy stem s
m ight generate such docum ents.
A spokesm an for the lender, Rick Sim on, said: “It is not Country wide’s policy to create or ‘fabricate’ any docum ents
as ev idence that they were sent if they had not been. We believ e it will be shown in further discov ery that the
Country wide bankruptcy technician who generated the docum ents at issue did so as an efficient way to conv ey the
dates the escrow analy ses were done and the calculations of the pay m ents as a result of the analy ses.”
The docum ents were generated in a case inv olv ing Sharon Diane Hill, a hom eowner in Monroev ille, Pa. Ms. Hill filed
for Chapter 1 3 bankruptcy protection in March 2 001 to try to sav e her hom e from foreclosure.
After m eeting her m ortgage obligations under the 60-m onth bankruptcy plan, Ms. Hill’s case was discharged and
officially closed on March 9, 2 007 . Country wide, the serv icer on her loan, did not object to the discharge; court
records from that date show she was current on her m ortgage.
But one m onth later, Ms. Hill receiv ed a notice of intention to foreclose from Country wide, stating that she was in
default and owed the com pany $4 ,1 66.
Court records show that the am ount claim ed by Country wide was from the period during which Ms. Hill was
m aking regular pay m ents under the auspices of the bankruptcy court. They included “m onthly charges” totaling
$3 ,84 0 from Nov em ber 2 006 to April 2 007 , late charges of $1 2 8 and other charges of alm ost $2 00.
A lawy er representing Ms. Hill in her bankruptcy case, Kenneth Steidl, of Steidl and Steinberg in Pittsburgh, wrote
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10/17/2009 Lender Tells Judge It ‘Recreated’ Lette…
Country wide a few weeks later stating that Ms. Hill had been deem ed current on her m ortgage during the period in
question. But in May , Country wide sent Ms. Hill another notice stating that her loan was delinquent and dem anding
that she pay $4 ,7 1 5.58. Neither Mr. Steidl nor Julia Steidl, who has also represented Ms. Hill, returned phone calls
seeking com m ent.
Justify ing Ms. Hill’s arrears, Country wide sent her lawy er copies of three letters on com pany letterhead addressed to
the hom eowner, as well as to Mr. Steidl and Ronda J. Winnecour, the Chapter 1 3 trustee for the western district of
Pennsy lv ania.
The Country wide letters were dated Septem ber 2 003 , October 2 004 and March 2 007 and showed changes in escrow
requirem ents on Ms. Hill’s loan. “This letter is to adv ise y ou that the escrow requirem ent has changed per the escrow
But Mr. Steidl told the court he had nev er receiv ed the letters. Furtherm ore, he noticed that his address on the first
Country wide letter was not the location of his office at the tim e, but an address he m ov ed to later. Neither did the
Chapter 1 3 trustee’s office hav e any record of receiv ing the letters, court records show.
When Mr. Steidl discussed this with Leslie E. Puida, Country wide’s outside counsel on the case, he said Ms. Puida told
him that the letters had been “recreated” by Country wide to reflect the escrow discrepancies, the court transcript
shows. During these discussions, Ms. Puida reduced the am ount that Country wide claim ed Ms. Hill owed to $1 ,500
from $4,7 00.
Under questioning by the judge, Ms. Puida said that “a processor” at Country wide had generated the letters to show
how the escrow discrepancies arose. “They were not offered to prov e that they had been sent,” Ms. Puida said. But she
also said, under questioning from the court, that the letters did not carry a disclaim er indicating that they were not
actual correspondence or that they had nev er been sent.
A Country wide spokesm an said that in bankruptcy cases, Country wide’s autom ated sy stem s are som etim es
ov erridden, with technicians m aking m anual adjustm ents “to com ply with bankruptcy laws and the requirem ents
in the jurisdiction in which a bankruptcy is pending.” Asked by Judge Agresti why Country wide would go to the
trouble of “creating a letter that was nev er sent,” Ms. Puida, its lawy er, said she did not know.
“I just, I can’t get ov er what I’m being told here about these recreations,” Judge Agresti said, “and what the purpose
Ms. Hill’s m atter is one of 3 00 bankruptcy cases inv olv ing Country wide that hav e com e under scrutiny by Ms.
Winnecour, the Chapter 1 3 trustee in Pittsburgh. On Oct. 9 , she asked the court to sanction Country wide,
contending that the com pany had lost or destroy ed m ore than $500,000 in checks paid by hom eowners in
Ms. Winnecour said in court filings that she was concerned that ev en as Country wide had m isplaced or destroy ed the
checks, it lev ied charges on the borrowers, including late fees and legal costs. A spokesm an in her office said she
would not com m ent on the Hill case.
O. Max Gardner III, a lawy er in North Carolina who represents troubled borrowers, say s that he routinely sees
lenders pursue borrowers for additional m oney after their bankruptcies hav e been discharged and the courts hav e
determ ined that the default has been cured and borrowers are current. Regarding the Hill m atter, Mr. Gardner said:
“The real problem in m y m ind when reading the transcript is that Country wide’s lawy er could not explain how this
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10/17/2009 Lender Tells Judge It ‘Recreated’ Lette…
happened.”
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UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF PENNSYLVANIA
APPEARANCES:
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2
APPEARANCES (Cont'd.):
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3
17 seat. Now I know why you're here. All right. That's -- okay.
25 report and accounting was signed, and then when she started to
1 make payments on her own, Countrywide sent them back and said
2 that they wouldn't take them, because she was in default, and
4 started.
8 Puida about it, and she explained to me that there are three
11 plan.
15 and our carbon copy is to Ken Steidl at the new address where
17 that --
21 subsequent time?
25 property?
8 They're not the first letter that was sent. They're just --
10 letter. That's a letter that they don't have, and now they've
12 prior letter?
15 All of these letters were -- there are three of them, and they
19 in '05.
21 ahead.
24 to represent or offer?
13 two are recreation letters, too. It's not the same -- how do
15 reasons?
22 they allege that they actually sent these letters at one time,
25 that far.
4 said that she was kind enough to lower what she want -- what
7 there. You said that there was a final -- after the Trustee
8 filed its final account and report and a discharge order was --
19 Honor.
7 there might be other payments that didn't get knocked down, and
10 so we could see --
13 that an --
17 THE COURT: I'm not sure what -- all right. Tell me.
19 involve this matter and nine other cases, that this particular
23 settled. Are you now backing off a settlement, or did you ever
2 approval, she did not want it. She didn't want a settlement.
3 She --
19 comfortable standing. Make sure you bend over and talk into
23 comfortable.
25 were never held out to be letters that were sent notifying any
9 prove that they had been sent. They were merely showing what
10 the breakdown was of the PMI and escrow at those various points
11 in time.
20 Why would you -- when did you disclose that these letters were
23 the event?
9 were being sent to him just showing what the case status was at
10 the time the discharge was entered, what the status is now, and
14 want you to be totally candid with me, because I'm going to ask
3 checked his file, and I had told him, well, you wouldn't have,
4 because this was -- these were not sent out. It's just drawing
9 point of the letters was to show what the payment changes were
24 the --
7 Julie Steidl said they never had the acceptance of the debtor.
11 that?
16 issue?
23 the miscellaneous matter, and the issues that were told to the
17 couldn't proceed.
21 consent order here. But I see that we're not even close to
24 Court as to the pending issues. Mr. Ross, did you have any
6 which -- I believe it's 203 with the 293 cases. That was the
15 of issues.
24 information that Your Honor may wish to have from the file.
2 let the one lawyer, and Mr. Ross, you're the man. Go ahead.
10 injunction violation.
15 believes that or knows that these three checks have been lost.
16 Two -- checks have been lost twice. There's been a third check
19 question --
3 mind -- and I'm not as close to it as you, but the two seem to
4 be unrelated.
12 that Ms. Steidl has referenced, what I'd like to bring to the
16 received those letters. Your Honor, the 293 cases are about
24 letter, 2007?
2 then. I'm wrong. I thought it was 2003 and 2005, but maybe
7 Mr. Ross.
1 we believe that the debtor has the right and it really makes
2 sense with what we've -- what the Court has learned today.
6 being told here about these recreations and what the purpose is
9 perception that notices were timely sent. But maybe there is,
14 what escrow was received and payments during the course of the
15 bankruptcy, what was paid out, what difference between the two
16 there may have been. The letters again were never offered as
23 these letters, you couldn't respond. You could not answer, and
24 I can appreciate that, and that's just more reason why there
16 * * * * *
17 CERTIFICATION
22