Thousands of Countrywide Customers Will Get Refunds for Overcharges
By Brandon Cornett | 6/14/10
© 2011, All rights reserved
Countrywide Home Loans overcharged thousands of customers before it was acquired by Bank of America (BOA). And now, following one of the largest FTC settlements ever, Bank of America is being required to pay refunds to former Countrywide customers. Technically, Bank of America will pay the money to the FTC, which will then disburse refund payments to more than 200,000 former customers of Countrywide.
Most of the overcharged customers were struggling with their payments at the time, and facing foreclosure as a result. Some were filing for Chapter 13 bankruptcy, as well. According to the FTC, Countrywide charged these people a variety of fees that were excessive in nature. The settlement and refunds only apply to customers whose mortgage loans were handled by Countrywide before it was acquired by BOA (in July 2008).
“Life is hard enough for homeowners who are having trouble paying their mortgage,” said FTC Chairman Jon Leibowitz. “To have … Countrywide piling on illegal and excessive fees is indefensible. We’re very pleased that homeowners will be reimbursed as a result of our settlement.”
Here’s what is truly despicable about all of this. Countrywide was one of the biggest subprime lenders during the housing boom. This means they gave mortgages to people who normally wouldn’t qualify for a loan — people with bad credit, high debt ratios, and shaky income. They did this by using a variety of “creative financing” strategies, such as the option ARM loan and the infamous stated-income loan (soon to be illegal).
In other words, Countrywide gave loans to people who had no business taking on mortgage debt. After all, the lender could simply sell the loans into the secondary mortgage market to limit their own risk. When such borrowers (predictably) fell behind on their mortgage payments, Countrywide cranked up the profit machine again, by levying huge fees.
From the FTC announcement: “Countrywide’s loan-servicing operation deceived homeowners who were behind on their mortgage payments into paying inflated fees — fees that could add up to hundreds or even thousands of dollars.”
Learn More About Countrywide Refunds
If your mortgage loan was serviced by Countrywide Home Loans before July 2008 (and you went through default, foreclosure or bankruptcy at the time), then you may be eligible for a refund through this settlement. According to the FTC’s settlement fact sheet, you don’t need to do anything. They will send notices in the mail to all customers who are eligible for the refund. See the video below for details.
You can learn more from this fact sheet on the FTC website:
http://www.ftc.gov/countrywide
