The Federal Trade Commission announced that 19,529 Georgia customers of Countrywide Home Loans will receive a share of millions of dollars in refunds for overcharges.
The payouts address criticisms that the mortgage industry had a role in a crisis that has left many homeowners in foreclosure after being steered into loans they could not afford. Once in foreclosure, the customers then found themselves sacked with exorbitant fees, regulators said.
In another case Wednesday, the Federal Reserve said Wells Fargo & Co. will pay a $85 million fine to settle civil charges that it falsified loan documents and steered borrowers toward high interest rate subprime mortgages during the housing boom.
The Countrywide refunds cover customers whose loans were in default and who were charged marked-up fees for property inspections and maintenance, title searches and other services between Jan. 1 2005 and July 1, 2008, FTC spokesman Frank Dorman told the AJC on Wednesday.
The refunds, part of a $108 million settlement Countrywide reached with the FTC a year ago, also target consumers who were charged hidden escrow charges and other fees after filing for bankruptcy because they couldn’t pay their mortgages.
Georgians are among 450,177 Countrywide customers who will be mailed checks of as much as several thousand dollars, the agency said. Dorman, the FTC spokesman, said mailings will begin July 21, and checks should be cashed by Sept. 19.
“All eligible consumers should expect to receive a check in the mail,” Dorman said. “If someone believes they should have gotten a check but has not received one, they should call the redress program administrator." The number is 1-888-230-3196.
When the settlement was announced in June 2010, Bank of America, which bought Countrywide in 2008, said it admitted no wrongdoing and settled to avoid the “expense and distraction” associated with litigating the case.
“It’s astonishing that a single company could be responsible for overcharging more than 450,000 homeowners,” FTC Chairman Jon Leibowitz said of Countrywide in a release. “Countrywide’s unconscionable behavior harmed American consumers on a massive scale.”
When homeowners fell behind on payments, Countrywide routinely ordered overpriced inspections and lawn mowing services for some properties, the FTC found during an investigation. The company also misstated loan balances and failed to properly credit payments.
One of the most egregious cases was detailed in a 2008 Atlanta Journal-Constitution article about a Cherokee County couple -- postal worker Robin Atchley and her husband John, a utility lineman. The Atchleys had filed for bankruptcy after falling behind on their mortgage payments.
During the bankruptcy, Countrywide repeatedly claimed that the couple failed to make payments -- claims proved untrue in court. The company also kept changing the amount it said the couple owed. Because of extra charges added to the account, the couple couldn't keep up with the payments and reluctantly decided to sell the home.
When they entered bankruptcy, Countrywide said they owed $185,000. When it came time to sell, the company upped the balance to $199,000. The Atchleys say they were overcharged more than $15,000.
The case got the attention of federal bankruptcy officials and later the FTC. Robin Atchley testified two years ago before a Senate committee.
In the case of Wells Fargo, the Fed said 3,700 to roughly 10,000 people could be compensated under the settlement with the nation's largest mortgage lender. The payments will likely range from $1,000 to $20,000. Wells Fargo did not admit any wrongdoing in the settlement.
The Fed said Wells Fargo Financial Inc. inflated borrowers' incomes on loan documents to qualify for mortgages they otherwise couldn't afford from 2004 until 2008. Sales personnel also pushed borrowers toward higher-interest, subprime loans, even though they were eligible for lower-interest mortgages, the central bank said.
Millions of homeowners who took on subprime loans during the housing boom have since lost their homes to foreclosure.
Attorneys general in all 50 states and the District of Columbia are jointly investigating whether lenders cut corners and improperly handled hundreds of thousands of foreclosure cases over the past several years.
In April, more than a dozen lenders and servicers singled out by the Federal Reserve were ordered to hire independent auditors to figure how many homeowners may have been improperly foreclosed upon in 2009 and 2010. As part of agreements, the financial firms will "remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies."
--The Associated Press contributed to this article.
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