Bank of America just agreed to a settlement with the Federal Trade Commission that will require the mortgage company to pay $108 million to 200,000 borrowers who were charged outrages fees by Countrywide Financial Corp. (now owned by Bank of America) while facing foreclosure.
Countrywide hit the borrowers who were behind on their mortgages with fees of several thousand dollars at times, the FTC said. The fees were for such services as property inspections and landscaping.
In addition, Countrywide created subsidiaries to hire vendors, which marked up the price for such services, the FTC said. The company "earned substantial profits by funneling default-related services through subsidiaries that it created solely to generate revenue," the agency said in a news release.
The agency also alleged that Countrywide made false claims to borrowers in bankruptcy about the amount owed or the size of their loans and failed to tell those borrowers about fees or other charges. The settlement requires Bank of America to notify bankrupt borrowers monthly notices about what they owe, including fees.
Countrywide's outrageous behavior towards homeowners facing foreclosure is not an isolated behavior. The mortgage industry is infested with mortgage companies who are looking to squeeze every dime out of homeowners facing foreclosure, even if it means engaging in fraudulent and unethical behavior. Look at all of the toxic mortgages that are still floating about in the housing market. Mortgage lenders are still not willing modify those mortgages even if it would help us stop the foreclosure crisis. Many have criticized the FTC for not doing enough to protect homeowners from predator mortgage lenders who would take advantage of homeowners even as they are going through foreclosure. The truth is that it seems that even those who are put in place to protect the interest of ordinary American homeowners are turning a blind eye to the greed and corruption of the mortgage industry.