WASHINGTON Bear Stearns Co Inc and its EMC Mortgage Corp unit have agreed to pay $28 million to settle allegations including misrepresenting how much borrowers owed, the U.S. Federal Trade Commission said on Tuesday.
Bear Stearns, which did not admit any wrongdoing in the settlement, was acquired by JPMorgan Chase & Co (JPM.N) earlier this year in an emergency sale brokered by U.S. financial authorities as the investment bank neared collapse in March.
The FTC, whose role includes consumer protection, accused Bear and EMC of a variety of offenses, including charging unauthorized late fees and padding loans with other charges.
Bear and EMC had a large portfolio of subprime mortgages, including loans made with little or no effort to ensure borrowers had adequate income and assets, the FTC said.
A year ago, EMC had more than 475,000 mortgage loans in its servicing portfolio with total unpaid balances of about $80 billion.
The FTC also accused EMC of charging borrowers for property inspections when the purpose of the inspection visit was to collect on the loan, and breaking debt collection laws.
"In numerous instances, including in connection with newly-acquired loans, EMC has made collection calls to borrowers repeatedly and with excessive frequency under the circumstances," the FTC said in its complaint.
As part of the settlement, EMC is required to take steps to ensure that they have accurate information about the loans being serviced.
JPMorgan declined to comment on the settlement.
(Reporting by Diane Bartz; Editing by Tim Dobbyn/Jeffrey Benkoe)