Mortgages Blog

Finance Blogs » Mortgages Blog » Lenders pay back borrowers

Lenders pay back borrowers

By Polyana da Costa ·
Friday, July 22, 2011
Posted: 3 pm ET

Here is something you don't hear every day: your lender was accused of lying and is now required to give you some money to make up for it.

The Federal Trade Commission today started mailing out a total of $108 million in refund checks to 450,177 homeowners who were allegedly overcharged by Countrywide Home Loans, which is now owned by Bank of America.

"Checks are being mailed today, so people should expect to receive them within a few days," says Frank Dorman, an FTC spokesman.

The refunds vary from a few to several thousand dollars and resulted from a settlement reached last year over allegations that Countrywide collected excessive fees from borrowers who were in default. The fees included charges for property inspections, lawn mowing and other services intended to protect the lender's interest in the homes.

"Consumers whose loans were serviced by Countrywide between January 1, 2005, and July 1, 2008, and who were subject to the company’s allegedly unlawful practices" are eligible for refunds, according to the FTC.

Borrowers who were in Chapter 13 bankruptcy and had fees or escrow charges added to their mortgage accounts without notice also will receive a check if they paid those fees to Countrywide after their bankruptcy case closed.

If you have already lost your home to foreclosure you remain eligible to receive the refund if you meet the other requirements.

"It does not matter whether the consumer still owns the home or whether they have paid off the loan Countrywide was servicing," Dorman says.

If you are one of the borrowers eligible for a refund you've probably been informed by now. But if you think you are eligible and don't receive a check within the next few days you may call (888) 230-3196 to inquire.

Wells Fargo borrowers

Also this week, the Federal Reserve Board issued a consent cease-and-desist order and assessed an $85 million civil money penalty against Wells Fargo. The order addresses allegations that Wells Fargo employees "steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications."

Wells Fargo is required to notify "all borrowers who obtained cash-out refinancing loans between January 2004 and June 2008 at a Wells Fargo Financial office where there is evidence that sales personnel at that office altered or falsified borrowers' income information."

The lender has 90 days to submit a plan detailing the process to comply with the order.

About 3,700 and possibly more than 10,000 borrowers may be eligible for compensation, according to the FRB. Compensation amounts will vary but will likely range from $1,000 to $20,000.

Wells said in a statement: "there is no customer-specific information that Wells Fargo can provide at this time," but "Wells Fargo Financial customers who would like to discuss this general issue further can call (877) 546-0090."

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
1 Comment
David Watkins
July 25, 2011 at 9:48 am

I have read about the illegal practices of Wells Fargo and Country Wide. I have only been hearing about home mortgages and I wanted to know when the FTC will step in and go across the board with regulations to banks like Santander and HSBC. These institutions have practices that are illegal and I can prove it. I would also like to know why there has not been a cap or limit to how much interest a financial institution can charge a consumer. The maximum amount of interest that should be charged to the consumer should not exceed over ten percent. This will ensure consumer protection and discourage defaults on account nationwide. This should be the next task of the FTC....let's get to it please.