Countrywide Begins to Pay Settlements

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A deal struck between the Federal Trade Commission and Countrywide Home Loans in June of last year will finally go into effect later this summer when some 450,000 borrowers who were charged excessive fees by Countrywide when they fell behind on their mortgages will finally begin receiving their fair share of $108 million the company agreed to pay back. The deal involves the largest settlement in the FTC’s history and involves more than double the number of mortages that were originally estimated.

Those who will receive cash payments under the settlement are the borrowers whose home loans were serviced by Countrywide between January of 2005 and July of 2008. At the time, Countrywide was the nation’s largest mortgage lender and the biggest loan servicer too, administering some $1.4 trillion in mortgages during the same period. Countrywide eventually crashed due to its’ subprime lending practices and was later acquired by the Bank of America in 2008. The Bank of America made a deal with the FTC to provide the commission with a comprehensive list of borrowers overcharged by Countrywide, but because the company’s records were totally disorganized, the bank had to hire an independent accounting firm that took over a year to identify the borrowers who were actually owed money. As a result, borrowers receiving money from the settlement can expect to get amounts ranging from $500 to $5,000 later this year.

The charges that excessive fees and improper charges were levied on borrowers whose loans were serviced by Countrywide means that the company could be responsible for overcharging more than 1 percent of all the mortgages in the United States. Jon Leibowitz, chairman of the Federal Trade Commission, said Countrywide’s practice “Was a business model based on deceit and corruption and the harm they caused to American consumers is absolutely massive and extraordinary.” Countrywide set up subsidiaries to perform services like property inspections, title searches and maintenance on homes going through foreclosure, and in many cases, marked up the cost of those services by more than 100 percent.

Almost 350,000 borrowers whose loans were serviced by Countrywide were routinely charged excessive amounts by Countrywide for default-related services and another 100,000 people will share in the settlement because Countrywide furnished them with incorrect accountings on how much they owed on their mortgages or had added fees and escrow charges without proper notice. The Bank of America did not dispute the FTC’s charges because the bank said it wanted to “Avoid the expense and distraction associated with litigating the case.” If you think you are owed money in the Countrywide Home Loans mortgage settlement, contact a Bank of America branch in your area.