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The FTC caught Coutrywide With Their Hand in YOUR Wallet!

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Real Estate Agent with The Benya Group 618516

The FTC says that Countrywide (now part of Bank of America) has agreed to pay $108 million to settle charges that the company "collected excessive fees from cash-strapped borrowers were were struggling to keep their homes." Apparently, Countrywide has had a habit of sending out third-party vendors to homes that were delinquent on their mortgage, and charged the homeowners for the services (lawn mowing, home maintenance, property inspections, that sort of thing)."Wanna Know What This Kid Would Charge to Mow Your Lawn? Doesn't Matter. He's Still Cheaper Than Countrywide 

Now all of that is fine and well, as the lender has the right to protect the value of properties they have a stake in. What wasn't kosher was that Countrywide would then charge an additional markup on the cost of the services, and the homeowners would be forced to pay a bill that could be as much as 2x the actual cost of the services.

The FTC didn't seem impressed, and it's cost Countrywide big bucks! Here's how Countrywide cashed in on their borrowers, according to the FTC's statement:

When homeowners fell behind on their payments and were in default on their loans, Countrywide ordered property inspections, lawn mowing, and other services meant to protect the lender’s interest in the property, according to the FTC complaint. But rather than simply hire third-party vendors to perform the services, Countrywide created subsidiaries to hire the vendors. The subsidiaries marked up the price of the services charged by the vendors - often by 100% or more - and Countrywide then charged the homeowners the marked-up fees. The complaint alleges that the company’s strategy was to increase profits from default-related service fees in bad economic times. As a result, even as the mortgage market collapsed and more homeowners fell into delinquency, Countrywide earned substantial profits by funneling default-related services through subsidiaries that it created solely to generate revenue.

The money from the settlement will be used to reimburse homeowners.

“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,” said FTC Chairman Jon Leibowitz. “We’re very pleased that homeowners will be reimbursed as a result of our settlement.”

Think this may have happened to you? Check out the FTC's Countrywide website. Photo Courtesy of LizWasHere via Flickr CC

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