Countrywide to Pay $108M for Mortgage ‘Inflated Fees’: FTC

CountrywideCountrywide Home Loans is required to pay $108 million to settle charges by the Federal Trade Commission that two of its servicing units collected excessive fees from borrowers who were struggling to keep their homes.
Countrywide is a subsidiary of Bank of America, but the charges stem from alleged practices that took place before the mortgage servicing company was acquired by BofA in July 2008.
The settlement – one of the largest judgments imposed by the FTC – will be used to reimburse 200,000 homeowners who were allegedly deceived into paying inflated fees. Many of the homeowners had taken out subprime mortgages, such as “payment option ARMs,” interest-only mortgages and loans made with little or no income verification, the FTC said.
“Life is hard enough for homeowners who are having trouble paying their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible,” said FTC Chairman Jon Leibowitz. “We’re very pleased that homeowners will be reimbursed as a result of our settlement.”
Homeowners who fell behind on their payments were ordered by Countrywide to provide property inspections performing upkeep services, such as lawn mowing “meant to protect the lender’s interest in the property,” according to the FTC complaint.
Instead of hiring third-party vendors to perform the services, Countrywide created subsidiaries to hire the vendors.
“The subsidiaries marked up the price of the services charged by the vendors – often by 100 percent or more – and Countrywide then charged the homeowners the marked-up fees,” the FTC said.
The FTC said most mortgage contracts require homeowners must pay for necessary default-related services, but mortgage servicers cannot “mark up the cost to make a profit or charge homeowners for services that are not reasonable or appropriate” to protect the mortgage holder’s interest.
Read the FTC’s news release.
Also see: Bank of America Now Offers Principal Forgiveness – If ‘Earned’

One thought on “Countrywide to Pay $108M for Mortgage ‘Inflated Fees’: FTC

  • June 7, 2010 at 4:54 pm

    According to my math that’s $50,000 a borrower. The “Evil Empire” foreclosed on me twice. Should I be checking my mail for for a $100,000 check? Right.

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