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Countrywide Pays $108 Million to Settle Mortgage Fraud Claims

Countrywide Pays $108 Million to Settle Mortgage Fraud Claims

 

Lost in the news of the manufactured debt-ceiling crisis and the very real tragedy in Oslo was news of another foreclosure fraud settlement.  Countrywide Home Loans agreed to pay $108 million to settle claims that they charged excessive fees to more than 450,000 borrowers.  The settlement is the biggest in the history of the Federal Trade Commission and wound up being about double what the commission had originally estimated.

The scope of the fleecing is pretty amazing.  Those 450,000 borrowers represented more than 1 percent of all mortgages in the United States.  The entire business model was “based on deceit and corruption” according to Jon Leibowits, chairman of the trade commission.

Countrywide set up subsidiary companies to conduct property inspections, title searches and maintenance on homes going through foreclosure.  These subsidiaries were then “hired” by Countrywide to perform those services, at a cost markup of more than 100%.  For example, some troubled borrowers were charged as much as $300 by Countrywide to mow their lawns.  The strategy was simply to increase profits from default-related services during bad economic times.

The excessive fees and improper charges were levied on borrowers whose loans were serviced by Countrywide.  Most of the borrowers receiving money under the settlement were routinely charged excessive amounts by Countrywide for default-related services.

But that’s not all.  Over 100,000 former Countrywide customers will share in the settlement because Countrywide gave them incorrect accountings about what was owed on their mortgages and added fees and escrow charges without notice.

While former customers may not see that much money from the settlement — most payments will be $500 or less, with 5% receiving $5,000 or more, the larger narrative is what we should focus on.  Our banking industry, when given the opportunity, did not blink at leveraging a troubled economy and profiting off those most vulnerable so much so that they were willing to commit outright fraud to do so.

Related Stories:

Banks Overcharged, Improperly Foreclosed On Military Families

House GOP: We Have To Cut Foreclose Prevention Program Because Democrats Haven’t Fixed It Yet

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Photo from tracyo via flickr.

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15 comments

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6:40AM PDT on Jul 30, 2011

Laughable. This is funny too: Citizens arrest and prosecution at the local level times 100,000+. Even funnier: massive class action law suits by *all* home owners foreclosed or not. Now thats a real knee slapper!

12:29AM PDT on Jul 27, 2011

We also need to remember that the financial industry was allowed to REGULATE itself. DEREGULATION allowed 450,000 American familys to be fleeced by American companys. Republicans are still paying off campaign promises to these same executives who probably STILL run these same companys. BOTH corporately AND personally THEY are responsible for current problems and need CORPORATELY and PERSONALLY to pay to get us out. AND STRICT REGULATIONS are needed to prevent an instant replay. Meantime Republicans continue to expect these same guys to make jobs.

3:18PM PDT on Jul 26, 2011

Guess BOA will raise it's fees again.

2:58PM PDT on Jul 26, 2011

Banks are bastards who will never see any jail time for ruining our economy and the entire housing market. We would have an easier time hanging all the politicians for treason.

10:23AM PDT on Jul 26, 2011

108 million???? Thats IT???

Gimme a frikking break. The company made that much per month. THis is so typical. But I guess we should be happy they had to pay anything.

10:10AM PDT on Jul 26, 2011

How do I get my payout?

9:07AM PDT on Jul 26, 2011

Amazing! A company that hasn't existed for over 3 years is going to be paying out over $100,000,000! Apparently, this article was as well researched as some of the comments.

6:55AM PDT on Jul 26, 2011

"The Banks are made of marble
With a guard at every door
And the vaults are stuffed with silver
That the workers sweated for."

The real truth: from an organizing song by the IWW back in the early 20th century: the International Workers of the World, one of the most progressive, anti-racist and pro-women truly *grassroots* labor movements in the history of the world - right here in the USA. Hard to believe? Well - the crapitalists assassinated many of their rank-and-file leaders including Joe Hill the Irish-American brilliant and outstandingly courageous labor activist who stood up to Big Mining and was assassinated by the Copper Mine Bosses in Butte, Montana. Google about Joe Hill, Elizabeth Gurley Flynn, and other in the IWW - learn *your* history instead of crapitalist his-story. Banks are Robbers, that's what they are set up to do: rob us 'ordinary people'.

6:04AM PDT on Jul 26, 2011

Countrywide obviously employs greedy criminals and they should be prosecuted to the FULLEST extent of the law. I am sick and tired of corporations raping and pillaging with abandonment and getting away with it at the expense of the American people.

Put these people in jail because white collar crime is still a crime and in many ways it's more reprehensible because these people already tons of money but it's still not enough. Disgusting!!

10:19AM PDT on Jul 25, 2011

This should spread to more than Countrywide...

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