* Countrywide pays $108 million to overcharged borrowers
* FTC chairman calls Countrywide behavior "unconscionable"
By Jonathan Stempel
NEW YORK, July 20 More than 450,000 borrowers
overcharged by the Countrywide mortgage lender when they fell
behind or defaulted on their home loans are finally receiving
refund checks under last year's $108 million settlement with
the Federal Trade Commission, the agency said.
The refunds average about $240 per borrower, though some
could reach several thousand dollars. They are part of one of
the largest settlements in FTC history.
According to the FTC, two Countrywide units had routinely
overcharged customers, including some in bankruptcy, between
Jan. 1, 2005, and July 1, 2008, when the largest U.S. mortgage
lender and servicer was bought by Bank of America Corp (BAC.N)
for $2.5 billion.
"Countrywide's unconscionable behavior harmed American
consumers on a massive scale," FTC Chairman Jon Leibowitz said
in a statement. "It's astonishing that a single company could
be responsible for overcharging more than 450,000 homeowners."
Rick Simon, a Bank of America spokesman, said the largest
U.S. bank settled to avoid the cost and distraction of
litigation, and did not admit wrongdoing.
He also said the accord covers only Countrywide
transactions that predated the 2008 takeover. Countrywide had
serviced roughly $1.4 trillion of loans at the time.
An FTC spokesman had no immediate additional comment. The
FTC has no jurisdiction over banks, but can act against
deceptive practices by non-bank financial-services firms.
According to the FTC, in an effort to profit during bad
economic times, Countrywide charged borrowers at risk of
foreclosure excessive fees on property inspections, lawn mowing
and other services it arranged.
Countrywide often marked up the cost by more than 100
percent, and sometimes more than 400 percent, the FTC said.
In addition, in servicing loans for bankrupt borrowers,
Countrywide made false or unsupported claims about the amounts
owed or status of the loans, and added fees and escrow charges
without notice, the FTC said.
The settlement is separate from Bank of America's $8.5
billion agreement announced last month to end much of the
litigation it faces by investors who bought securities backed
by risky Countrywide home loans. Some of those investors have
complained that this agreement may be unfair. [ID:nN1E76C1XV]
(Reporting by Jonathan Stempel, editing by Matthew Lewis)