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


Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.45%4.43%
15 yr fixed3.89%3.89%
5/1 ARM4.17%4.22%
30 yr refi4.44%4.43%
15 yr refi3.87%3.87%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 24,580.89 119.19 0.49%
Nasdaq 7,692.82 -20.14 -0.26%
S&P 500 2,754.88 5.12 0.19%
Treasuries 2.90 0.00 0.10%
Data as of 1:42am ET
Company Price Change % Change
Comcast Corp 33.81 1.02 3.11%
Bank of America Corp... 28.99 -0.30 -1.02%
General Electric Co 13.05 0.29 2.27%
AT&T Inc 31.69 0.09 0.28%
Micron Technology In... 57.10 -2.34 -3.94%
Data as of Jun 22

Sections

One of the world's leading smartphone makers is aiming for the biggest stock market listing in nearly two years. More

If Trump puts tariffs on European cars, it would hurt automakers who build a lot of cars in the United States. More

Russian trolls posing as an American college student tweeted about divisive social, political and cultural issues using an account that amassed thousands of followers -- and appeared in dozens of news stories published by major media outlets -- as recently as March. More