A Democratic lawmaker on Wednesday urged federal regulators to investigate alleged mistreatment by Countrywide Financial Corp. of homeowners in bankruptcy, the Associated Press rerpots.


Sen. Charles Schumer, D-N.Y., said in a letter to Federal Trade Commission chairman William Kovacic that Countrywide has sought to improperly use the bankruptcy process to foreclose on borrowers' homes.


Bankruptcy judges have criticized the company for arguing in court that borrowers were delinquent on their payments even when they were not, Schumer said in his letter. In one case in North Carolina, Countrywide improperly sought to foreclose on a home even though the foreclosure had been halted by a bankruptcy filing, the letter said.


Debtors who declare bankruptcy under Chapter 13 are generally allowed to keep their homes while paying off their debts under a court-approved bankruptcy plan.


An investigation by the FTC "would help pull the curtain back on a hidden corner of the existing foreclosure crisis, and could help stem the tide of homeowners who are now unnecessarily being forced into bankruptcy and foreclosure," Schumer's letter said.

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