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


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 fixed3.93%4.15%
15 yr fixed3.03%3.12%
5/1 ARM3.27%3.19%
30 yr refi4.01%4.20%
15 yr refi3.09%3.17%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,399.67 19.26 0.12%
Nasdaq 4,316.07 57.64 1.35%
S&P 500 1,904.01 17.25 0.91%
Treasuries 2.18 -0.02 -0.82%
Data as of 4:52am ET
Company Price Change % Change
Apple Inc 99.76 3.49 3.63%
Bank of America Corp... 16.26 0.00 0.00%
Pfizer Inc 27.93 0.05 0.18%
Facebook Inc 76.95 4.28 5.89%
Microsoft Corp 44.08 0.00 0.00%
Data as of Oct 20

Sections

Better-than-expected iPhone sales and record Mac sales lifted Apple in its fiscal fourth quarter. More

China's economy has clocked its worst quarter in more than five years, raising concerns over Beijing's ability to meet its own annual growth target. More

In three years, all Chicago high school students will have to take a coding course in order to graduate. More

Host a furniture market. Here's how small town High Point, N.C. rakes in this much money -- twice a year. More

Detroit has 80,000 dilapidated properties and 100,000 empty lots. It's trying to get more people like Antjuan Wyatt to buy them. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.