July 22nd, 2011 5:58 PM by Lehel S.
The Federal Trade Commission said Wednesday that Countrywide Home Loans allegedly cheated more than 450,000 homeowners as they struggled to keep their homes, a figure far higher than the agency’s initial estimate when it settled the case last year.
The increased number of alleged victims came in an FTC announcement that it is mailing refund checks to those affected. The agency originally estimated that about 200,000 customers were overcharged by Countrywide before the company was acquired by Bank of America Corp. in 2008.
The FTC reached an agreement with Bank of America last June in which the company agreed to pay $108 million to settle charges that Countrywide took advantage of homeowners in distress by inflating the cost of services relating to their defaults, such as property inspections, title reports and lawn mowing.
The agency also alleged that Countrywide overstated the amounts that borrowers owed when they entered bankruptcy, as well as surreptitiously adding fees and charges to homeowners’ accounts.
FTC Chairman Jon Leibowitz said in a statement Wednesday that Countrywide’s behavior was unconscionable. “It’s astonishing that a single company could be responsible for overcharging more than 450,000 homeowners,” he said.
Thomas Pahl, assistant director of the FTC’s division of financial practices, said in an interview that when the agency took a close look at Countrywide’s records, it discovered that far more people had been overcharged on default-related fees than previously thought.
Despite the large increase in the number of victims, there is enough money in last year’s settlement to fully reimburse all victims, Pahl said.
Bank of America didn’t acknowledge any wrongdoing as part of the settlement, which it said it reached to avoid the expense of litigating the case. A bank spokeswoman reiterated Wednesday that the FTC claims involved activity at Countrywide prior to its acquisition by the bank.
The refund checks being mailed to homeowners range from less than $500 to as much as several thousand dollars, the FTC said.
The agency said Countrywide charged nearly 348,000 customers marked-up fees for property inspections, property maintenance, title searches and foreclosure trustee services.
It said more than 102,000 customers who were in Chapter 13 bankruptcy had fees or escrow charges added to their mortgage accounts without notice.