Facts

In March 2008, Countrywide Home Loans Inc. ordered property inspections and services for the purpose of protecting its interests in properties. In an effort to do so, Countrywide created subsidiaries to employ vendors to do such work, and the subsidiaries marked up the prices charged by vendors. In July 2008, Bank of America Home Loans Servicing LP (BAC) bought Countywide.

The Federal Trade Commission charged Countrywide and BAC with collecting excessive fees from borrowers.

PLAINTIFF'S CONTENTIONS:
Plaintiff claimed that defendant intended to increase its profits based on default-related service fees through its subsidiaries. Plaintiff argued that mortgage servicing companies may not mark up service costs for profits, or charge mortgage holders for unreasonable and inappropriate services. Further, plaintiff claimed that defendant made untrue claims to borrowers about money owed and loan status, and did not inform borrowers in bankruptcy of new charges on accounts.

Result

Defendants agreed to pay $108 million, which will reimburse overcharged homeowners. The settlement also prohibited defendant from making false statements regarding loan accounts, charging unauthorized fees, and charging fees for default-related services, unless reasonable and charged by a third party. Also, defendant must advise consumers if it uses affiliates for services and will alter its bankruptcy servicing policies.