The Bear Stearns Cos. LLC and its subsidiary, EMC Mortgage Corp., have agreed to pay $28 million to settle Federal Trade Commission (FTC) charges that the companies engaged in unlawful practices in servicing consumers' home mortgage loans.
The companies allegedly 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.
Under the proposed settlement, the companies will stop the alleged illegal practices and institute a data integrity program to ensure the accuracy and completeness of consumers' loan information, says the FTC.
‘Like other companies that send a bill, mortgage servicers must make sure that the amount they say is due really is the amount due,’ says Lydia B. Parnes, director of the FTC's Bureau of Consumer Protection. ‘Consumers have the right to expect accuracy from the company that collects their mortgage payments.’
The proposed settlement requires Bear Stearns and EMC to pay $28 million to redress consumers who have been injured by the illegal practices alleged in the complaint. In addition, the settlement bars the defendants from future law violations and imposes new restrictions and requirements on their business practices. Specifically, the settlement
- bars the defendants from misrepresenting amounts due and any other loan terms;
- requires them to possess and rely upon competent and reliable evidence to support claims made to consumers about their loans;
- bars them from charging unauthorized fees and places specific limits on property inspection fees even if they are authorized by the contract;
- prohibits them from initiating a foreclosure action, or charging any foreclosure fees, unless they have reviewed all available records to verify that the consumer is in material default, confirmed that the defendants have not subjected the consumer to any illegal practices, and investigated and resolved any consumer disputes; and
- prohibits the defendants from violating the FDCPA, FCRA and TILA.
Source: Federal Trade Commission