More than 450,000 borrowers, including an undetermined number on Long Island, overcharged by the Countrywide mortgage lender when they fell behind or defaulted on their home loans are receiving refund checks under last year's $108-million settlement with the Federal Trade Commission.
Refunds will average about $240 per borrower, comprising the entire sums they were overcharged, and more than 15,000 borrowers should receive more than $1,000 each, the FTC said.
The settlement reached in June 2010 is one of the largest in FTC history, both in dollars and the number of consumers recovering money -- roughly 1 percent of all U.S. mortgage holders, it added.
According to the FTC, two Countrywide units routinely overcharged customers, including some in bankruptcy, between Jan. 1, 2005, and July 1, 2008, when the largest U.S. mortgage lender and servicer was bought by Bank of America Corp. for $2.5 billion.
Rick Simon, a Bank of America spokesman, said the largest U.S. bank settled to avoid the cost and distraction of litigation, and did not admit wrongdoing. He also said the accord covers only Countrywide transactions that predated the 2008 takeover. Countrywide serviced roughly $1.4 trillion of loans at the time.
According to the FTC, Countrywide charged 347,846 borrowers whose loans were in default excessive fees on property inspections, lawn mowing, title searches and other services it arranged.
And in servicing loans for 102,331 bankrupt borrowers, Countrywide made false or unsupported claims about the amounts owed or status of the loans, and added fees and escrow charges without notice, the FTC said. -- Reuters