Mortgage Lenders under Spotlight at Senate Hearing

In an ongoing investigation into alleged irregularities by mortgage lenders, the Senate on Tuesday heard testimony from the Chief Executive of Countrywide Financial Corporation, Steve Bailey and Katherine Porter, a professor at the University of Iowa.

Addressing the Senate, Bailey admitted that Countrywide had made mistakes "from time to time", but disputed claims of conscious wrong doing on the part of the mortgage giant.

"Servicers have also been accused of intentionally assessing inappropriate fees and costs to borrowers in bankruptcy. With respect to Countrywide these allegations are simply not true," he said.

Porter however testified that mortgage companies and servicers have improperly sought repayment for attorneys' fees and other costs without fully disclosing or documenting fees.

"The upsetting reality is that the current bankruptcy system routinely forces borrowers to pay bloated amounts and permits mortgage servicers to misbehave without serious consequence," she testified.

Senator Charles E. Schumer, the Democrat of New York who heads the panel, criticized what he called a "vulture mentality" in the mortgage industry.

Director of the Justice Department's bankruptcy trustee program, Clifford White said the department had stepped up its efforts to prosecute violations.