June 8, 2010

New Protections for Homeowners and Bank of America to Pay $108 Million

Nearly two years ago Bank of America acquired Countrywide. Those in the know believe that this was B of A's business plan for obtaining the very lucrative home loan servicing business assets of Countrywide. It may be time for B of A to start paying for those business assets by settling up with the homeowners bilked by Countrywide.

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.
Bank of American admitted no wrongdoing in connection with the settlement.  It remains to be seen whether anyone will have enough staying power to discover what B of A knew about the business of Countrywide before the acquisition in July 2008. Countywide's portfolio exceeded $1.4 Trillion according to the FTC. One would think that B of A's due diligence would have revealed this particular problem and perhaps many more. If so, Bank of America should not be heard to complain about paying $108 Million nearly two years later.

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.

January 2, 2010

California Homeowners Institute Launches Blog

The California Homeowners Institute (CHI) launched a new blog today. The CHI Blog has been launched in response to the overwhelming problems and numerous issues facing homeowners in California now and most likely for many years to come.

The CHI Blog will seek to inform homeowners about their rights and obligations with regard to everyday situations in California. The blog will provide a forum for open discussion about issues and problems faced by homeowners everyday.

Legal advice will not be provided by the CHI Blog. However, the California Homeowners Institute will provide reviews of pending or recently-enacted laws, and discuss court cases which have or will have an impact on California homeowners. Further, it is intended that followers of the CHI Blog will be well informed and know when they should seek the assistance of an attorney skilled in the area of homeownership rights.

The California Homeowners Institute, as the primary sponsor of the CHI Blog, will also provide homeowners with general information, with approaches to problems and situations, and with trends in California and across the country related to homeownership.

Comments from attorneys, real estate industry professionals and, most importantly from homeowners will be welcomed. The comments from readers and followers of this blog, together with materials from Contributors to the CHI Blog and from the California Homeowners Institute, will assist homeowners with:

(1) identifying and evaluating the risks,
(2) determining their rights and obligations, and
(3) developing solutions to the ongong problems.

If you have a comment or suggestion as to information or a topic you would like to see on this California Homeowners Institute Blog, please email us anytime.

We wish everyone a happy and prosperous 2010!