By Silla Brush - 06/07/10 03:39 PM EDT
Countrywide, the former mortgage giant, will pay $108 million to settle federal accusations of overcharging and deceiving borrowers before the financial crisis.
Bank of America acquired Countrywide in 2008, which was at the time the top servicer of mortgages, with a portfolio in excess of $1 trillion. The firm had expanded deep into the market for subprime and nontraditional mortgages at the heart of the housing market collapse.
The Federal Trade Commission (FTC) opened an investigation into excessive fees charged to borrowers. The FTC alleged that Countrywide ordered property inspections and other services that charged borrowers heavy fees as part of a way to drive profit to the mortgage giant. The $108 million will be used to reimburse overcharged borrowers.
"This is a major breakthrough that closes one of the ugliest chapters of the entire subprime mortgage crisis," Sen. Charles Schumer (D-N.Y.) said Monday. "This settlement should be seen as an admission by those behind Countrywide that they made a habit of profiting off the misfortune of their most troubled borrowers."