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450,000 Countrywide borrowers to get payments -FTC
July 20, 2011 / 4:55 PM / 6 years ago

450,000 Countrywide borrowers to get payments -FTC

* Countrywide pays $108 million to overcharged borrowers

* FTC chairman calls Countrywide behavior “unconscionable”

By Jonathan Stempel

NEW YORK, July 20 (Reuters) - 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)

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