Countrywide tries to block probe

Countrywide Financial Corp., the largest U.S. mortgage lender, is trying to block a Justice Department official from investigating its actions in cases filed by homeowners in bankruptcy, court papers show.

Federal law doesn’t permit the U.S. trustee’s “wide-ranging” investigation, Thomas Connop, a lawyer for the lender, argued in a Feb. 28 hearing. He claimed that it would create a precedent for “unreasonable intrusion” into the affairs of other bankruptcy creditors.

“The ramifications of the United States trustee’s interpretation of its power [are] really staggering,” Connop said.

Calabasas-based Countrywide has been sued in other Bankruptcy Courts by U.S. trustees, who are appointed to oversee bankruptcy cases. The trustees have accused the lender of abusing the bankruptcy system by making false claims.

U.S. Bankruptcy Judge Thomas Agresti ordered the parties to file written arguments but did not say when he would decide whether to block the investigation.

Separately, the FBI is investigating whether Countrywide misrepresented its financial position and the quality of its mortgages in regulatory filings, a person with knowledge of the probe said last week.