Some 200,000 homeowners -- including thousands in Florida -- will share in a $108 million settlement announced Monday by the Federal Trade Commission.
Countrywide Home Loans, a subsidiary of Bank of America, agreed to pay to settle FTC charges that the company collected excessive fees from mortgage holders struggling to keep their homes.
The overcharges, which occurred before BofA purchased Countrywide in July 2008, were generated by companies it created to assess inflated fees. The FTC said Countrywide again bilked homeowners when it made inaccurate claims about the amounts borrowers owed in bankruptcy cases.
According to the FTC:
"When homeowners fell behind on their payments and were in default on their loans, Countrywide ordered property inspections, lawn mowing, and other services meant to protect the lenders interest in the property. But rather than simply hire third-party vendors to perform the services, Countrywide created subsidiaries to hire the vendors.
"The subsidiaries marked up the price of the services charged by the vendors -- often by 100 percent or more -- and Countrywide then charged the homeowners the marked-up fees."
The FTC complaint alleged that the companys strategy was to increase profits from default-related service fees in bad economic times.
"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 created solely to generate revenue," the commission stated.
FTC Chairman Jon Leibowitz said his agency is still working to determine how much individual homeowners were overcharged.
Calling Countrywide's record-keeping "abysmal," Leibowitz could not say how many Florida homeowners were victimized, or by how much. Florida ranked second behind California in terms of Countrywide clients.
FTC Commissioner J. Thomas Rosch praised Bank of America for negotiating a "sterling" agreement.
The FTC action comes almost two years after Countrywide agreed to a relief program for 57,000 Florida homeowners.
As part of the 2008 agreement, Countrywide said it would launch a loan modification program for qualifying owner-occupied sub-prime home loans and pay option adjustable rate mortgages to move borrowers into fixed-rate, fully amortizing loans.
Additionally, Countrywide agreed to suspend foreclosures on all loans that meet the eligibility criteria while determining whether the borrower qualifies for a loan modification, and will waive all loan modification fees associated with a modification under the new program.
Attorney General Bill McCollum's office also said Countrywide would make cash payments to eligible individual borrowers who have lost their homes to foreclosure after experiencing an early payment default or after an interest rate reset. Some $20 million was earmarked for Florida borrowers.
Another $4 million was dedicated for foreclosed borrowers who agree to voluntarily leave their home at the time of foreclosure sale.
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Reach Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
