Countrywide, once the largest mortgage lender in the US with a portfolio more than $1.4 trillion has been ordered to pay one of the highest settlements in the industry. Bank of America, who acquired Countrywide in 2008 will pay out to past Countrywide loan holders $108 million, to settle excessive charges and fees that Countrywide sacked on undeserving homeowners. According to the Federal Trade Commission more than 200,000 homeowners will receive settlements.
Jon Leibowitz, chairman of the Federal Trade Commission said,
Countrywide profited from making risky loans to homeowners during the boom years, and then they profited again when the loans failed. Life is hard enough for homeowners who are having trouble paying their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible.
Lebowitz adds that it will take some time to contact those who will be receiving claims, blaming the delay on Countrywide’s poor record keeping. “The record-keeping of Countrywide was abysmal,” said Leibowitz. “Most frat houses have better record-keeping than Countrywide.”
The list of claims against Countrywide is long and shocking. In it’s report the FTC said those homeowners who were behind on their mortgage payments were coerced into paying exuberant fees. Many paid well into the thousands above what they should have.
The report also showed that Countrywide inflated claims against those homeowners who were struggling through bankruptcy. Countrywide added extra charges and fees, while failing to notify the mortgage holder. They also failed to credit payments that had been made.
Perhaps the most shocking are the fees they charged for services to the property. They claimed property inspections and landscaping charges, filing fees to the homeowners for an inflated rate of more than 400%, in some cases.
Bank of America, who currently owns Countrywide, was quick to its defense. In a statement they wanted it know that these practices took place before they acquired the company. While they are working to help settle the claim, they want to make sure homeowners know that the investigations were started before Bank of America purchased Countrywide. Simply put, Bank of America claims no wrong-doing on their part.