WASHINGTON, D.C. - (Mealey's) In what the Federal Trade Commission is calling one of the "largest judgments imposed in an FTC case, and the largest mortgage servicing case," two Countrywide mortgage servicing companies will pay $108 million to settle charges filed by the FTC alleging that the mortgage servicers collected excessive fees from borrowers, according to an FTC press release issued June 7 (Federal Trade Commission v. Countrywide Home Loans, Inc., et al., C.D. Calif.).
Under the terms of the settlement, Countrywide Home Loans Inc. and BAC Home Loans Servicing LP, formerly doing business as Countrywide Home Loans Servicing LP, will pay the $108 million, which will be refunded to homeowners who were overcharged by Countrywide Home Loans and BAC before July 2008.
According to the press release, Countrywide is also prohibited from "taking advantage of borrowers who have fallen behind on their payments."
In particular, the defendants are prohibited from:
According to the press release, "[i]n addition, Countrywide must advise consumers if it intends to use affiliates for default-related services and, if so, provide a fee schedule of the amounts charged by the affiliates."
Moreover, under the terms of the settlement agreement, which is subject to court approval, Countrywide is required to make a number of changes to its bankruptcy servicing practices.
The FTC approved filing the complaint and settlement against Countrywide Home Loans and BAC by a 5-0 vote, and both the complaint and settlement were filed in the U.S. District Court for the Central District of California.
The FTC contends that the defendants "deceived homeowners who were behind on their mortgage payments into paying inflated fees - fees that could add up to hundreds or even thousands of dollars. Many of the homeowners had taken out loans originated or funded by Countrywide's lending arm, including subprime or 'nontraditional' mortgages such as payment option adjustable rate mortgages, interest-only mortgages, and loans made with little or no income or asset documentation."
Nonparty Bank of America acquired Countrywide in March 2008.
The press release is available at http://www.ftc.gov/opa/2010/06/countrywide.shtm.
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