Countrywide Financial Corp. is trying to block a Justice Department official from investigating its actions in bankruptcy cases involving its borrowers.
Countrywide said in court documents filed Feb. 28 that federal law doesn't permit the U.S. Trustee's "wide-ranging" investigation and claimed that it would create a precedent for "unreasonable intrusion" into the actions of bankruptcy creditors.
There are 300 cases in Pittsburgh and western Pennsylvania where the lender used abusive behavior to penalize homeowners who defaulted on their loans, according to the Wall Street Journal.
"The ramifications of the United States Trustee's interpretation of its power is really staggering," a Countrywide attorney said in a transcript of the hearing.
Bankruptcy Judge Thomas Agresti ordered the two parties to file written arguments and did not comment when he will decide whether to block the investigation.
This is just one of myriad troubles facing the lender, which is set to be acquired mid-year by Bank of America Corp. There are several pending cases against the lender surrounding its lending and post-bankruptcy actions including an FBI investigation reported earlier this week looking at whether Countrywide participated in securities fraud.
The Calabasas-based lender also had its credit rating cut by Fitch Ratings Wednesday and said Thursday that its loan delinquency rate rose 66 percent last month, compared to the same period a year earlier.
Shares in Countrywide were down 3.4 percent to $4.61 in early trading Friday.
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