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Bank of America Settles FTC Lawsuit Over Excessive Fees for Countrywide Customers

June 18, 2010

Our Upland predatory lending attorneys have written several times in this space about the legal actions against Countrywide Financial Corp., and after its buyout of Countrywide, Bank of America. Countrywide customers have benefited from several legal settlements, including settlements allowing them to modify their loans, thanks to legal actions brought privately and by state attorneys general alleging that Countrywide engaged in predatory lending practices. Now, Bloomberg News reported June 7, Bank of America has settled a lawsuit brought by the Federal Trade Commission alleging more wrongdoing by Countrywide -- charging inflated and illegal fees to homeowners who went into default. The FTC said the $108 million penalty is one of the largest in its history. The money will be returned to more than 200,000 borrowers.

According to the article, the illegal behavior targeted homeowners who were already behind on their mortgage payments. Countrywide allegedly charged these homeowners up to 400 percent of the normal fee for services like property inspections, and sometimes didn't give any notice of extra charges. When homeowners went into bankruptcy, Countrywide allegedly inflated the debts it entered into the bankruptcy court, essentially using the system to get extra money from bankrupt borrowers. The U.S. Trustee program, which enforces bankruptcy laws, worked with the FTC to resolve the case; an official would not confirm that it was also referred for criminal prosecution to the Justice Department. An FTC spokesman said the agency would need some time to reconstruct how much money is owed to individual borrowers, in part because "most frat houses have better record-keeping" than Countrywide did.

As Pico Rivera predatory lending lawyers, we are pleased that the FTC has been able to recover compensation for people who were taken advantage of by Countrywide. As the FTC spokesman points out, the borrowers targeted were people who were already struggling financially, so badly that they had trouble making their mortgage payments. Piling illegal and excessive fees onto the top of that is cynical and exploitive. Unfortunately, that's consistent with other cynical and exploitive behavior by Countrywide, including targeting minorities for expensive subprime loans -- regardless of their financial health -- and writing loans to people they knew couldn't make payments, knowing that the loans would quickly be securitized. The FTC spokesman mentioned that his agency could do more to prevent this kind of exploitation if Congress gives it rule-making power over the mortgage industry, and we hope Congress follows through.

Howard Law PC aggressively protects the rights of clients who are victims of unfair, deceptive and predatory practices by mortgage lenders. The practices of Countrywide and other deceptive lenders are specifically forbidden by state and federal consumer protection laws. Among other things, the federal Truth in Lending Act requires lenders to disclose terms and costs of a loan, and federal civil rights laws forbid lenders from specifically targeting minority borrowers for subprime loans. California state law repeats many of these protections and also forbids lenders from presenting a contract in English after negotiations were conducted in any other language. Our Cypress predatory lending attorneys help victims of these and other predatory practices fight back, by suing to cancel or alter unfair loans and get unfair payments returned.

If you believe a lender, broker or other mortgage professional took advantage of you when you took out a loan, you should talk to Howard Law about your rights and your options. To set up a free case evaluation, call us today at 1-800-872-5925 or send us a message online.