Justice Department Will Investigate Countrywide's Lending Practices

A judge has authorized an investigation into Countrywide’s lending practices, says the NYT.

Judge Thomas P. Agresti of the Federal Bankruptcy Court in Pittsburgh on Tuesday approved an inquiry into “the impact of Countrywide’s bankruptcy procedures on the integrity of the bankruptcy process” by the Office of the United States Trustee, a Justice Department arm that polices bankruptcy filings.

Judge Agresti dismissed Countrywide’s protests that authorizing an investigation by the trustee’s office could have “staggering implications” for other big mortgage lenders by starting 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 filings involving Countrywide.

The trustee’s office has asserted that it needed to look into accusations that Countrywide had chronically mishandled mortgage payments, pumped up bills with improper fees and charges and ignored court orders while pursuing troubled consumers.

Countrywide denies that the mistreatment of homeowners is a “feature of its mortgage processing backroom systems.” We can’t help but point out that if you have to hire lawyers to help you deny that your incompetance is a “feature,” you are officially really bad at your job.

Court Approves Review of Countrywide Practices [NYT]