On Wednesday, the Federal Trade Commission (FTC) announced a Redress Program Administrator -- Gilardi & Co. LLC, will begin mailing out refund checks out to 450,000 plus homeowners who Countrywide Financial overcharged in an attempt to make more profits. The checks will reimburse borrowers who defaulted on their mortgages or filed Chapter 13 bankruptcy. The settlement, reached in June 2010, totals $108 million.
At one point during the real estate boom leading to the housing market crash in 2007, Countrywide Financial, financed one-fifth of all the mortgage loans in America. The Bank of America bought the financially troubled mortgage lender for $4.1 billion in 2008.
What Usually Occurs After Foreclosure
When a mortgage lender forecloses on a home and takes possession of the property, the mortgage servicer has the responsibility of taking the necessary steps to protect the property, which serves as security for the loan. Usually, the servicer orders a title report for the property to find out if the property has liens place on it by other creditors. Other tasks may include hiring an inspector to determine the condition of the home, securing the home, and making sure routine maintenance activities take place on a regular schedule.
Usually, the mortgage servicer pays vendors for the cost of services performs on the property. However, the homeowner who lost the property has the obligation to pay for the services along with other costs associated with foreclosure, including attorney’s fee and other legal costs related to the process the cost of the tasks. Failing to collect the cost of these services from the homeowner reduces the amount the mortgage lender receives after the sale of the home at the auction.
Typically, when a lender successfully closes on a home, the mortgage servicer would call a local vender, such as a title company and order the title for the property. If the title report cost $300, the loan services pay the title company and simply add the expense to the foreclosure costs. However, what the FTC accuses Countrywide Financial of perpetrating a scheme to unfairly profit from the woes of vulnerable homeowners facing foreclosure or bankruptcy.
FTC accuses Countrywide of setting up other companies, or subsidiaries, to process foreclosure expenses. For example, a subsidiary firm would hire a title company to provide a title report on the property and pay the company $300 for the report. The subsidiary would send a bill marked up to $500. Countrywide would add the excessive expense to the homeowner’s foreclosure costs.
In addition, according to the Federal Trade Commission, Countrywide made fictitious or exaggerated claims regarding the amount owed by homeowners who filed bankruptcy. The company also failed to inform those homeowners of the additional fees tacked on to their outstanding mortgages.
How to Obtain a Refund
Eligible homeowners will automatically receive a check in the mail. If you moved from the address that company would have in its records, there are three things you should do:
1) If you have not already done so, submit a Change of Address form with the local Post Office. The FTC states it will update its records, using the Postal Service’s National Change of Address system, before mailing out checks.
2) Send your change of address to:
FTC v. Countrywide Home Loans, Inc.
c/o Gilardi & Co. LLC
PO Box 808054
Petaluma CA 94975-8054
3) Submit an email to the Redress Program Administrator at this address:
Make sure you include the property address and your current mailing address in the email. The toll-free phone number for Gilardi & Co. is 888-230-3196.