WASHINGTON, June 7 (UPI) -- The Federal Trade Commission said Bank of America would pay $108 million to settle charges that Countrywide lenders overcharged struggling mortgage holders.
The FTC said the overcharges on mortgage services occurred before Bank of America purchased the national lender in July 2008.
The law allows for lenders to protect their investments with services such as lawn mowing and property inspections if borrowers fall behind on their payments, the FTC said. Borrowers can be billed for the services.
In the case of two Countrywide mortgage servicing companies, however, instead of hiring vendors to perform the services, the firms created subsidiaries that would hire the vendors, increasing the price of the service enormously, the FTC said.
"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," FTC Chairman Jon Leibowitz said.
The $108 million settlement will establish a fund for reimbursing the cheated homeowners. It is the largest settlement ever involving a mortgage servicing case, the FTC said in a statement.
Bank of America said it was settling the case to avoid the distraction of going to trial.
