Bank of America (BofA) will pay $108 million to settle the US Federal Trade Commission's charges that Countrywide Financial Corp, which it acquired in 2008, had collected excessive fees from hundreds of thousands of customers facing foreclosure of their home loans.
"Countrywide mortgage servicing companies will pay $108 million to settle the Federal Trade Commission (FTC) charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes," FTC said in a statement.
The $108-million charges represents one of the largest judgements imposed in an FTC case. It would be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by BofA in 2008.
According to the FTC, Countrywide's loan-servicing operations deceived homeowners who were behind on their mortgage payments into paying inflated fees, that could add up to hundreds or even thousands of dollars. The fees were for services like property inspection and landscaping.
In March 2008, Countrywide was ranked as the top mortgage servicer in the US, before being acquired by BofA, with a balance of more than $1.4 trillion in its servicing portfolio.
"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.
"We're very pleased that homeowners will be reimbursed as a result of our settlement," said FTC chairman Jon Leibowitz.
The FTC also said Countrywide made false claims to the borrowers in bankruptcy about the amount owned or the size of their loans and failed to tell those borrowers about fees or other charges.
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