Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Foreclosure tricks cost Countrywide $108 million

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Mortgage lender Countrywide Home Loans Inc. agreed to pay $108 million Monday to settle government claims that it charged homeowners facing foreclosure inflated service fees.

The settlement with the Federal Trade Commission, one of the largest imposed in an agency case, will reimburse overcharged borrowers whose loans were serviced by Countrywide before it was acquired by Bank of America (BAC, Fortune 500) in July 2008.

"Life is hard enough for homeowners who are having trouble paying their mortgage," said FTC chairman Jon Leibowitz. "To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible."

According to the FTC, Countrywide ordered homeowners that fell behind on their mortgages to pay for default-related services like property inspections and lawn mowing to protect the lender's interest in the property.

While that's typical under most mortgage contracts, the FTC alleged, Countrywide created subsidiaries that marked up prices for the services by 100% or more in some cases.

"As a result, even as the mortgage market collapsed and more homeowners fell into delinquency, Countrywide earned substantial profits by funneling default-related services through subsidiaries that it create solely to generate revenue," the FTC said.

Further, Countrywide made false claims to borrowers that were trying to save their homes in Chapter 13 bankruptcies and failed to inform them about new fees and escrow charges, which it tried to collect after borrowers were no longer protected by bankruptcy, sometimes through foreclosure, according to the FTC.

Bank of America said in a statement that "no legacy Bank of America transactions are included in the monetary settlement."

Rather, the settlement allows Bank of America "to avoid the expense and distraction associated with litigating the case" and "put all of these matters behind us." To top of page


Overnight Avg Rate Latest Change Last Week
30 yr fixed3.64%3.64%
15 yr fixed2.76%2.76%
5/1 ARM2.90%2.95%
30 yr refi3.66%3.69%
15 yr refi2.79%2.81%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,873.22 44.93 0.25%
Nasdaq 4,933.51 31.74 0.65%
S&P 500 2,099.06 8.96 0.43%
Treasuries 1.85 0.03 1.54%
Data as of 12:26pm ET
Company Price Change % Change
Bank of America Corp... 14.88 0.18 1.22%
Coca-Cola Enterprise... 51.55 0.69 1.36%
Baxalta Inc 45.53 -0.17 -0.37%
Apple Inc 100.35 -0.06 -0.06%
Micron Technology In... 12.31 0.36 3.01%
Data as of May 27

Sections

Jean-Claude Decaux, the French businessman who produced the first automatic public toilets, died at the age of 78. More

Janet Yellen hinted again Friday that a June or July interest rate hike is a very real possibility. More

The FBI has opened a national security investigation into the hacking of Bangladesh's central bank amid signs that the hack might have come from North Korea. More

The gender pay gap in the labor market is pretty well documented. But the gender gap also exists in the housing market. More