Countrywide Financial Corp. faces a Federal Trade Commission investigation into its loan-servicing business.
The FTC has asked for information to study if Countrywide violated federal law in the business of collecting and managing mortgages, Countrywide said late Monday in its last quarterly filing as an independent company. The troubled Calabasas-based mortgage lender was acquired by Bank of America last month.
Sen. Charles Schumer, a New York Democrat who chairs the Senate Subcommittee on Administrative Oversight and the Courts, asked the FTC in May to investigate Countrywide's treatment of borrowers. Countrywide services almost $1.5 trillion in mortgages, covering about 9 million borrowers.
In a separate development, an arm of the U.S. Justice Department has challenged an agreement that Countrywide reached with a bankruptcy court in Pittsburgh, saying it would make it harder to investigate and sue the mortgage lending giant.
Countrywide in July agreed to pay $325,000 to the Chapter 13 bankruptcy trustee in Pittsburgh, Ronda Winnecour, to cover legal costs and settle litigation accusing it of abusive practices in 293 separate cases.
But Acting United States Trustee Roberta DeAngelis said in an Aug. 4 court filing that a "nondisparagement" clause in the Countrywide agreement might impede the Justice Department's own investigation of the lender, according to documents obtained by Reuters. The Office of the United States Trustee is a Justice Department division that handles bankruptcy cases.
Nondisparagement clauses are common in settlement agreements. But DeAngelis called for the nondisparagement provision in this case to be stricken or revised to make clear it will not impede her office or other investigations or litigation by third parties.
Bank of America last week said Countrywide also faces a formal SEC probe for undisclosed activities. Attorneys general in California, Connecticut, Florida and Illinois also have sued Countrywide over its lending practices.
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