Countrywide Settlement Hopeful: 'I Felt Smothered'

Photo: Fighting foreclosure: Rochelle Gear confident shell see money from new $108 million settlement between Countrywide, BofA and FTC

Rochelle Gear thought falling behind on her adjustable-rate mortgage was bad enough. But it got worse, Gear said, when her lender, Countrywide Financial, started tacking on new fees in addition to her mortgage debt and interest payments.

Gear estimates that Countrywide charged her some $3,000 for services related to her late mortgage payments on her Atlanta condo, including a fee when the company sent someone to visit the property to check if she was still living there.

"I went through months of fees and back and forth and harassment," said Gear, who first shared her story with "World News" in 2007. "I felt smothered."


Today, Gear hopes she'll be among at least 200,000 homeowners that the Federal Trade Commission has announced could be eligible for payments from a $108 million settlement with Countrywide over excessive fees.

According to the FTC, between 2005 and July, 2008, two Countrywide mortgage servicing companies charged "inflated" fees for property inspections, lawn-mowing and other services to borrowers who were in default on their loans. The fees, the FTC said, were sometimes marked up as much as 100 percent, leaving cash-strapped borrowers on the hook for hundreds or thousands of dollars. When customers tried to save their homes through Chapter 13 bankruptcy filings, the FTC said, Countrywide "made false or unsupported claims" about how much homeowners owed.

"Life is hard enough for homeowners who are having trouble paying their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible," FTC Chairman Jon Leibowitz said in a statement. "We're very pleased that homeowners will be reimbursed as a result of our settlement."

The alleged excessive charges occured before Countrywide was purchased by Bank of America in 2008.

In a statement, Bank of America said the settlement did not include an admission of any wrongdoing and that the bank agreed to the settlement "to avoid the expense and distraction associated with litigating" a case against the FTC.

Determining Who Gets Countrywide Cash Will Take Months

Exactly how much relief Countrywide borrowers will find from the settlement remains to be seen. Shortly after the settlement was announced Monday morning, critics noted on online message boards that on average, the 200,000 borrowers expected to be eligible for the settlement would see just $540 each.

That average could fall even lower -- FTC spokesman Frank Dorman said that more than 200,000 borrowers could be eligible for the $108 million pot.

But Dorman said it's not appropriate the couch the settlement in terms of averages.

"Some of these people are going to get thousands of dollars," he said. The amount that each borrower is eligible for will depend on individual circumstances and how many consumers ultimately choose to participate in what the FTC is calling a redress program.

Over the next few months, the FTC will pore through bank records to determine who is eligible for the program and will be contacting consumers by mail, Dorman said. Find more information from the FTC HERE.

Dorman said it's unclear how many of Countrywide borrowers who could be eligible for the settlement actually managed to hold on to their properties and how many lost their homes to foreclosure.

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