U.S. Trustee routinely cracks down on consumers for alleged abuses of the bankruptcy system. Never before has the agency gone after a big lender.
Countrywide Financial Corp. has sought to block a Justice Department probe into its treatment of bankrupt homeowners, saying the agency is exceeding its authority in a way that has "really staggering" implications for other big lenders.
The mortgage lender is facing numerous lawsuits, among them is the litigation with the Office of the U.S. Trustee, an arm of the Justice Department that polices the bankruptcy system. Last month, the U.S. trustee sued Countrywide in Ohio, Florida and Georgia, alleging the big mortgage lender mishandled loan payments, made improper threats of foreclosure and slapped unnecessary charges on homeowners. . . . The trustee's office routinely cracks down on consumers for alleged abuses of the bankruptcy system. Never before has the agency gone after a big lender as it has in the Countrywide cases.
The trustee's office says looking out for abuses by creditors is part of its job. If Countrywide succeeds in shutting down the investigation, it said, homeowners will have no one to defend them against alleged improper actions by the company.