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Homeowners in financial trouble aren’t getting a lot of great news these days.  But 450,177 of them will be getting a check in the mail that represents their share of the FTC’s $108 million settlement with mortgage giant Countrywide. And companies that take advantage of Americans struggling to pay the bills will be getting a little something, too:  a strong message from the FTC that unfair or deceptive practices targeting cash-strapped consumers won’t be tolerated.

Last year, the FTC announced a settlement with Countrywide Home Loans and BAC Home Loans Servicing, which formerly did business as Countrywide Home Loans Servicing. Court papers filed by the FTC tell an intriguing story of hidden fees, deceptive claims in bankruptcy servicing, and sweetheart deals with corporate subsidiaries. For example, when homeowners default, it’s understandable that lenders will have to spend some money to protect their interest in a property — things like inspections, lawn mowing, etc. But who did Countrywide hire to perform these duties? A national lawn care company? A local landscaper? Jimmy from down the block? No, Countrywide hired, well, itself — in the form of subsidiaries that contracted with other companies, allegedly jacked up the price of these routine services by 100% or more, and then passed on their exorbitant bills to people already struggling to keep their heads above water.

Just an isolated instance? Not likely. According to the FTC’s lawsuit, the company’s strategy at the time was to profit from default-related services. In its complaint, the FTC quoted Countrywide Financial Corporation’s President and COO:

“Now, we are frequently asked what the impact of our servicing costs and earnings will be from increased delinquencies and [loss] mitigation efforts, and what happens to costs. And what we point out is, as I will now, is that increased operating expenses in times like this tend to be fully offset by increases in ancillary income in our servicing operation, greater fee income from items like late charges, and importantly from in-sourced vendor functions that represent part of our diversification strategy, a counter-cyclical diversification strategy such as our businesses involved in foreclosure trustee and default title services and property inspection services.”

As a result, said the FTC, even as the mortgage market collapsed and more homeowners fell into delinquency, Countrywide earned big bucks by funneling default-related services through subsidiaries set up solely to generate revenue. The company may have characterized it as a “counter-cyclical diversification strategy,” but the FTC called the company’s marked-up fees something else: deceptive and unfair practices in violation of Section 5 of the FTC Act.

Also, in servicing loans for people trying to save their homes in Chapter 13 bankruptcy, the FTC’s complaint alleged that Countrywide made false or unsupported claims about how much they owed, added fees and escrow charges without notice, and engaged in other deceptive practices.

In addition to $108 million for consumers, the FTC’s settlement prohibits Countrywide — which has been acquired by Bank of America — from taking advantage of borrowers who’ve fallen behind on their payments and bars it from a host of misleading practices.

People who receive the checks — which vary from less than $500 to as much as several thousand bucks and will hit the mail later this month — should cash them by September 19, 2011.  Former Countrywide customers with questions should call the redress administrator, Gilardi & Company, at 1-888-230-3196 or visit the FTC’s Countrywide settlement webpage available in English and Spanish.

(BTW, if you know a homeowner who might be affected by the settlement, remind them that the FTC never asks for money before sending refunds.  And share Money Matters, the FTC’s one-stop financial site with tips and resources for consumers.)

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