Jun
09

Mortgage Company Took Advantage of Struggling Homeowners and Will Pay

June 09, 2010

If you are one of the cash-strapped homeowners who had your mortgage with Countrywide Financial Corp. from 2005-2008, then I have good news and bad news.

I like to get the bad news out of the way. The Federal Trade Commission (FTC) has sued Countrywide, saying it took advantage of homeowners already behind in their payments by charging them excessive fees for default-related services like property inspections, appraisals and lawn mowing.

Chicago real estateThe good news: The effected homeowners are going to get their money back.

At least 200,000 homeowners will receive some of the $108-million settlement announced this week. It is the largest settlement ever awarded in a mortgage servicing case.

According to the FTC, Countrywide ordered property inspections, appraisals, lawn mowing and other services to protect the lender’s interest when homeowners went into default on a property, but instead of hiring third-party vendors, the mortgage company created subsidiaries to hire the vendors, which marked up the price of the services — sometimes by 100 percent or more — and then Countrywide charged the homeowners the marked-up fee.

Mortgage companies are allowed to charge lapsing homeowners for default-related services, but customers can’t choose who does the work. Still, mortgage companies are not allowed to mark up the cost to make a profit.

Countrywide is also accused of adding charges to homeowners going through bankruptcy without telling them, and making false claims about amounts owed by homeowners in bankruptcy that couldn’t be backed up.

If you are eligible for a reimbursement, you will get a letter in the mail. It could take several months, so be patient.

In 2008, Countrywide, which was once the country’s largest mortgage lender, was bought by Bank of America, which now owns the largest number of homes in default by any U.S. lending company.

Countrywide still faces tons of lawsuits from homeowners, employees and the Securities and Exchange Commission.

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Tracey

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