Bank of America Will Pay $108 Million Settlement

Bank of America will pay $108 million to settle federal charges that Countrywide Financial Corp., which it acquired nearly two years ago, collected out-sized fees from about 200,000 borrowers facing foreclosure.

The Federal Trade Commission announced the settlement Monday and said the money will be used to reimburse borrowers.

Bank of America, which is the largest financial institution in Florida, bought Countrywide in July 2008, taking over its vast portfolio of prime and sub-prime loans in the state.

A spokeswoman for Bank of America couldn't provide details on how many of the 200,000 borrowers involved in the FTC case were in Florida.

But in October 2008, Florida Attorney General Bill McCollum reached a landmark settlement over what regulators in 10 states said were Countrywide's predatory lending practices. At that time, 57,000 mortgage holders in Florida were expected to benefit from almost $1 billion in mortgage relief from that suit.

FTC officials emphasized the actions in the case took place before the acquisition. Bank of America said it agreed to the settlement "to avoid the expense and distraction associated with litigating the case," which also resolves litigation by bankruptcy trustees. "The settlement allows us to put all of these matters behind us," the company said.

Countrywide at the time hit the borrowers who were behind on their mortgages with fees of several thousand dollars, the FTC said. The fees were for services such as property inspections and landscaping.

Countrywide created subsidiaries to hire vendors, which marked up the price for such services, the FTC said. The company "earned substantial profits by funneling default-related services through subsidiaries that it created solely to generate revenue," the agency said in a news release.

The agency also alleged that Countrywide made false claims to borrowers in bankruptcy about the amount owed or the size of their loans and failed to tell those borrowers about fees or other charges.

According to information from the FTC, borrowers who might benefit from the $108 million settlement will be notified by letter.

To learn more about the settlement, go to:
http://www.ftc.gov/countrywide.