Senator urges FTC to investigate Countrywide

WASHINGTON (Reuters) - The U.S. Federal Trade Commission should probe Countrywide Financial Corp's practices involving how it handled borrowers entering bankruptcy, Sen. Charles Schumer said on Wednesday.

Schumer, a New York Democrat, asked FTC Chairman William Kovacic to immediately commence an investigation if the agency has not already done so, saying the mortgage lender has a pattern of misconduct.

Countrywide faces a slew of lawsuits accusing the largest U.S. mortgage lender of abusing the bankruptcy and foreclosure processes and of sloppy record-keeping.

Some critics of lenders say borrowers who enter bankruptcy face a wide variety of undisclosed legal and other charges related to their homes.

"This behavior has contributed to an industrywide crisis that has harmed homeowners, roiled Wall Street, and stalled the economy," Schumer said in the letter.

Countrywide agreed in January to be acquired by Bank of America Corp for $4 billion.

Schumer, who is chairman of the Senate Judiciary Subcommittee on Oversight and the Courts, held a hearing last week during which a company official admitted some mistakes.

The company pledged to hire an independent auditor to review its practices. Company officials did not immediately return a telephone call seeking comment.

Last month, a federal bankruptcy judge said the U.S. Trustee, an arm of the Justice Department that oversees bankruptcy cases, had the authority to investigate alleged misconduct by Countrywide.

At the hearing Schumer questioned why Bank of America agreed to buy Countrywide, a transaction encouraged by financial regulators, and suggested Bank of American consider a lower price for Countrywide.

(Reporting by John Poirier, editing by Gerald E. McCormick, Richard Chang)