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Breaking Legal News & Current Events

Bank of America Agrees to Pay $108 million to 200,000 Homeowners

Bank of America agreed to settle charges by the Federal Trade Commission (FTC) that Countrywide Financial Corp. collected "junk fees" from almost 200,000 homeowners facing foreclosure. According to reports by MSNBC , Countrywide (which Bank of America acquired about 2 years ago) will pay $108 million to settle the federal charges.

The settlement is intended to refund various "junk fees" that were charged by Countrywide while borrowers faced foreclosure or were trying to save their homes with a loan modification. The fees, which went unexplained to homeowners, were often for property inspection fees and maintenance fees. In addition, the FTC alleged that Countrywide misled borrowers who were already in Chapter 13 bankruptcy not only about the amount of their loan, but also the status of their loan.

Junk fees assessed against homeowners, particularly those in the loan modification process, generate profits for servicing companies like Countrywide to the detriment to borrowers. Junk fees present HUGE barriers in the loan modification process, says Diane Thompson, an attorney with the National Consumer Law Center. Not all fees incurred during the loan modification period are junk fees though, some fees are legitimate costs homeowners should be expected to cover and others are negotiable.

Before Bank of America bought Countrywide in July 2008, Countrywide was the largest mortgage servicer in US. This latest deal with Bank of America represents the largest mortgage settlement for the FTC.

If you believe that you've been charged "junk fees" by your bank or mortgage lender, Phillips & Garcia may be able to help. Please contact us to share your story.

SOURCE: MSNBC

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