Countrywide’s Troubles Worsen, Is Bankruptcy Imminent?

by Florida's #1 Mortgage Planner on January 9, 2008

Countrywide Still Sinking Bankruptcy rumors are sinking Countrywide’s stock and the love has again faded for CW.  Of course, Mozilo will come out today and say something about it, so you can expect another post presenting Mozilo’s side soon.

As reported in the Sun-Sentinel, Countrywide has been ordered to provide documents and testimony to federal officials over allegations of false mortgage claims against bankrupt South Florida homeowners.  The company has until the end of the month to provide those documents and must submit to questioning under oath next month.

"As a general principle, if it is judicially determined that lenders are intentionally attempting to rip off their customers with false or fraudulent proofs of claim, that would have serious consequences for lenders," U.S. Bankruptcy Judge A Jay Cristol, who’s presiding over a similar case in Miami, said Tuesday in an interview.

The stock fell drastically yesterday and trading was halted for about 10 minutes in the early afternoon.  Shares ended the day at $5.47 after hitting a 52-week new low of $5.05.  If you remember, I posted how it resembled ACA holdings back in November and where CW could be today (about 6 weeks later).

Whether or not Countrywide does end up filing for bankruptcy, CW is certainly facing serious issues in regards to litigation.  They have at least 2 cases in Florida and several others as part of a nationwide investigation.  Other states involved include Texas, Pennsylvania, and Arizona.

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