Countrywide, the big subprime lender, will pay $108 million to settle charges that the company collected "excessive fees" from borrowers, the FTC said today.
When borrowers go into default on the mortgage, it's typical for mortgage servicing companies to charge them for things such as lawn mowing and property inspections. But Countrywide set up special subsidiaries, which charged the delinquent borrowers twice what the services actually cost, according to the FTC.
The money will be used to repay borrowers who were allegedly overcharged. But it could take months to figure out who will get the money.
"The record-keeping of Countrywide was abysmal," the FTC chairman told Reuters. "Most frat houses have better record-keeping than Countrywide."
The accusations refer to the company's behavior before it was acquired by Bank of America, in July, 2008.
B of A said it agreed to the settlement to avoid the expense of litigating the case, Reuters says. The company did not admit wrongdoing.
Hat Tip: Nick Timiraos