A federal judge has authorized an in-depth probe of Countrywide Financial Corp.'s mortgage processing systems by bankruptcy investigators hunting for evidence that the lender systematically abuses borrowers, Dow Jones reports.
Judge Thomas Agresti of the U.S. Bankruptcy Court in Pittsburgh on Tuesday gave the green light to an inquiry into "the impact of Countrywide's bankruptcy procedures on the integrity of the bankruptcy process" by the Office of the U.S. Trustee, a Justice Department arm that polices the bankruptcy courts.
In a 50-page opinion, Agresti dismissed Countrywide's protests that authorizing a probe by the trustee's office could have "staggering implications" for other big mortgage lenders by triggering an investigatory "free-for-all."
He said an investigation was warranted because the trustee's office had demonstrated "a common thread of potential wrongdoing" in several bankruptcy cases involving Countrywide.
The trustee's office asserted that it needed to look into widespread allegations that Countrywide chronically mishandles mortgage payments, pumps up bills with improper fees and charges, and ignores court orders while pursuing troubled consumers.
For reprint and licensing requests for this article, CLICK HERE.