The Bear Stearns Companies LLC and its subsidiary, EMC Mortgage Corporation, agreed to pay $28 million to settle FTC charges that they engaged in unlawful practices when servicing mortgage loans. The FTC alleged that the companies misrepresented the amounts borrowers owed, charged unauthorized fees, such as late fees, property inspection fees, and loan modification fees, and engaged in unlawful and abusive collection practices. Without admitting to any of the allegations made by the FTC, the companies agreed to a settlement that (1) requires the companies to pay $28 million to redress borrowers, (2) prohibits the companies from misrepresenting any loan terms, (3) bars the companies from charging unauthorized fees, and places specific limits on property inspection fees even if they are authorized, (4) prohibits the companies from initiating a foreclosure action, or charging any foreclosure fees, unless they have reviewed all available records to verify that the borrower is in material default, confirmed that the defendants have not subjected the borrower to any illegal practices, and investigated and resolved any borrower disputes, and (5) prohibits the companies from violating the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Truth in Lending Act. Click here for the FTC’s press release and access to the order.
Alert September 23, 2008