Yesterday the Federal Trade Commission (FTC) announced that B of A will pay $108 Million in settlement of federal charges that Countrywide over billed struggling homeowner-borrowers. This settlement covers only about 200,000 borrowers with regard to the $108 Million - a drop in the bucket according to many. See the full FTC Announcement, especially if you are a homeowner experiencing financial difficulty, foreclosure and/or bankruptcy.
In addition to paying the $108 Million, the settlement order prohibits Countrywide (now B of A) from taking advantage of borrowers who have fallen behind on their payments. This order will cover millions of mortgage loans, including tens of thousands of loans involving borrowers in bankruptcy and/or foreclosure. According to the FTC, with regard to the servicing of loans, there is a permanent bar against the following:
- Making false or unsubstantiated representations about loan accounts, such as amounts owed.
- Charging any fee for a service unless it is authorized by the loan instruments, by law, or by the consumer for a specific service requested by the consumer.
- Charging any fee for a default-related service unless it is a reasonable fee charged by a third party for work actually performed. If the service is provided by an affiliate of a defendant, the fee must be within limits set by state law, investor guidelines, and market rates. Defendants must obtain annual, independent market reviews of their affiliates’ fees to ensure that they are not excessive.
The California Homeowners Institute believes this settlement may be just the beginning for Bank of America in connection with its desire to become a major player in the home loan servicing business.
