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Lawmakers investigate possible abuse of the bankruptcy code by mortgage companies.
Mortgage lenders and companies are accused by lawmakers of misusing bankruptcy system to improperly pressure homeowners facing foreclosure. Lawmakers say bankruptcy laws are designed to protect troubled homeowners, but there are loopholes that allow unscrupulous mortgage lenders to do otherwise.
"I fear a vulture mentality is developing in some quarters," said Sen. Charles Schumer, D-N.Y., who chairs the Senate Judiciary Subcommittee on Administrative Oversight and the Courts.
Comparing to last year, foreclosure went up to 112 % during the first three months of 2008. Many analysts fear that the home loan market will worsen as the interest rates are reset this year.
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