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It's bad enough that record numbers of people are losing homes because of mortgages they couldn't afford and should never have gotten. Mortgage companies shouldn't add insult to injury by overcharging borrowers already in foreclosure. Fortunately, a federal monitor is moving to stop such abusive practices. The threat of congressional action should also motivate the industry to improve its behavior.
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At the center of the federal investigation is Countrywide Financial Corp., the nation's largest mortgage lender and loan servicer. The U.S. Trustee for the bankruptcy courts has subpoenaed Countrywide seeking documents related to suspect fees in at least a dozen cases nationwide.
Countrywide has argued in court filings that the U.S. Trustee, a division of the Justice Department, is overstepping its authority. The trustee rightly responded that it has a legal obligation to protect the public. Mortgage companies that misrepresent claims, moreover, threaten the integrity of the bankruptcy courts.
Washington is finally acting. An administration-brokered industry plan could offer relief to some borrowers by freezing low, introductory interest rates that would otherwise jump to unaffordable levels. Congress is weighing a number of measures to tighten mortgage laws. One bill would help borrowers keep their homes by allowing bankruptcy judges to change mortgage-payment terms.