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Probe of Countrywide servicing practices moves forward

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A federal bankruptcy judge has ruled that Countrywide Financial Corp. must cooperate with a Justice Department investigation into allegations that the lender failed to properly credit mortgage payments received from bankrupt borrowers, overestimated what they owed, and made unfounded demands for payment. Although it "has certainly not been proven that Countrywide did anything wrong" in nearly 300 bankruptcy cases pending before the U.S. Bankruptcy Court for the Western District of Pennsylvania, U.S. Trustee Kelly Beaudin Stapleton has "made a showing of a common thread of potential wrongdoing," Judge Thomas Agresti ruled in dismissing Countrywide's motion to block the investigation. Stapleton identified 10 cases in which she claimed Countrywide acted questionably, or which raised issues regarding the integrity of the bankruptcy system, Agresti said. U.S. trustees have filed similar lawsuits in Florida, Georgia and Ohio, Reuters reported. Countrywide arg...