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Federal Trade Commission v. Countrywide Home Loans

March 22, 2012

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
COUNTRYWIDE HOME LOANS, INC., A CORPORATION, AND BAC HOME LOANS SERVICING, LP, A LIMITED PARTNERSHIP, DEFENDANTS.



SUPPLEMENTAL CONSENT JUDGMENT AND ORDER

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), and Defendant, BAC Home Loans Servicing, LP ("BAC Home Loans"), jointly stipulate to this Supplemental Consent Judgment and Order ("Supplemental Order"), which resolves Plaintiff's allegation that BAC Home Loans violated the Consent Judgment and Order ("Consent Order") entered by this Court on June 15, 2010. BAC Home Loans received notice of the Consent Order on June 17, 2010.

NOW THEREFORE IT IS HEREBY ORDERED AS FOLLOWS:

FINDINGS

A. This Court has jurisdiction over the subject matter of this case and over BAC Home Loans.

B. Venue in this district is proper under 28 U.S.C. § 1391(b) and (c), and 15 U.S.C. § 53(b).

C. The Court finds that entry of this Supplemental Order is in the public interest.

D. Effective July 1, 2011, and after proper notice was provided to the FTC, BAC Home Loans merged with and into Bank of America, N.A., an entity not subject to the Consent Order and exempt from the FTC's jurisdiction. Therefore, upon entry of this Supplemental Order, all prospective injunctive provisions and other prospective requirements of the Consent Order shall terminate as to BAC Home Loans.

E. From June 17, 2010, through June 30, 2011, the Consent Order, inter alia, prohibited BAC Home Loans from: (1) making misrepresentations about the Status of Loans or amounts owed on Loans (Paragraph I.A); (2) assessing and/or collecting any Fee for a service unless it is (a) authorized and Clearly and Prominently disclosed by the Loan Instruments and not prohibited by law, (b) expressly permitted by law and not prohibited by the Loan Instruments, or (c) for a service requested by a consumer after disclosure and consent (Paragraph II); (3) assessing and/or collecting title Fees that were not Clearly and Prominently disclosed on BAC Home Loans' Fee Schedule (Paragraph V); (4) initiating foreclosure actions or assessing Fees in connection with an actual or threatened foreclosure action prior to the review of Competent and Reliable Evidence demonstrating that the consumer is in default under the terms of the Loan (Paragraph VI); (5) consummating foreclosure sales without having investigated non-frivolous disputes by consumers (Paragraph VI); (6) filing proofs of claim in connection with consumers' Chapter 13 Bankruptcy proceedings without providing copies of Loan Instruments and a detailed itemization of all amounts claimed (Paragraph VII); (7) Servicing Loans without an adequate data integrity program in place (Paragraph XI); and (8) failing to provide all information reasonably required to administer redress within thirty (30) calendar days of a written request by the Commission (Paragraph XIV).

F. The FTC alleges that, during the period from June 17, 2010, through June 30, 2011, BAC Home Loans has violated the provisions of the Consent Order enumerated in Paragraph E, as follows: 1. BAC Home Loans misrepresented amounts owed on Loans in violation of Paragraphs I.A and VI of the Consent Order through the submission to courts, and service on consumers, of affidavits that contained Fees unsupported by Competent and Reliable Evidence; 2. BAC Home Loans also misrepresented the status of Loans in violation of Paragraph I.A of the Consent Order by improperly completing foreclosure sales where a material change in the circumstances, such as a short-sale, loan modification, or bankruptcy, had occurred before the sale was completed; 3. BAC Home Loans assessed and/or collected Fees for Default-Related Services that were not authorized and Clearly and Prominently disclosed by the Loan Instruments and/or not permitted by law in violation of Paragraph II of the Consent Order; 4. BAC Home Loans assessed and/or collected title Fees that were not Clearly and Prominently disclosed on BAC Home Loans' Fee Schedule in violation of Paragraph V of the Consent Order; 5. BAC Home Loans filed proofs of claim in Chapter 13 Bankruptcy actions against consumers without attaching copies of the Loan Instruments in violation of Paragraph VII of the Consent Order; 6. BAC Home Loans serviced Loans in Bankruptcy without an adequate data integrity program, including without sufficient data integrity to ensure the accuracy of post- petition payment amounts, interest amounts, and total amounts, included in proofs of claim filed in Chapter 13 bankruptcy actions, in violation of Paragraph XI of the Consent Order; and 7. BAC Home Loans failed to provide all information reasonably required to administer redress, in violation of Paragraph XIV of the Consent Order, which required BAC Home Loans to provide that information within 30 days of the Consent Order's entry. Specifically, on June 22, 2010, the Commission requested information from BAC Home Loans that would enable the Commission to determine the identities of consumers entitled to redress and the amounts necessary to compensate those consumers. BAC Home Loans did not provide complete and accurate information in response to that request until May 2011.

G. BAC Home Loans does not admit to any of the allegations set forth herein, and entry of this Supplemental Order is not an admission of any such allegations of wrongdoing or violation of law. Nonetheless, BAC Home Loans stipulates and agrees to entry of this Supplemental Order to settle and resolve these disputes. H. BAC Home Loans waives: (a) all rights to seek appellate review or otherwise challenge or contest the validity of this Supplemental Order; (b) any claim BAC Home Loans may have against the Commission, its employees, representatives, or agents that relate to the matter stated herein; (c) all claims under the Equal Access to Justice Act, 28 U.S.C. § 2412, as amended by Pub. L. 104-121, 110 Stat. 847, 863-64 (1996); and (d) any rights to attorneys' fees that may arise under said provision of law.

I. The parties, by and through their counsel, have agreed that entry of this Supplemental Order resolves all matters in dispute between them concerning Defendants' compliance with the Consent Order up to the date of entry of this Supplemental Order. All claims by the FTC against BAC Home Loans related to the Consent Order shall be settled and resolved, and the FTC relinquishes and releases any right it may have to bring any further enforcement action under the Consent Order as to BAC Home Loans, except as provided below.

DEFINITIONS

For purposes of this Supplemental Order, the following definitions shall apply:

1. "BAC Home Loans" shall mean BAC Home Loans Servicing, LP, formerly doing business as Countrywide Home Loans Servicing, LP, and its successors and assigns, by whatever names they might be known, but not including any Bank. Effective July 1, 2011, BAC Home Loans Servicing, LP merged with and into Bank of America, N.A., an entity not subject to the Consent Order and exempt from the FTC's jurisdiction. For purposes of this Supplemental Order only, Bank of America Corporation agrees to assume the obligations of BAC Home Loans Servicing, LP, solely with respect to any monetary liability arising from alleged violations of Home Loans of the Consent Order from June 17, 2010, through June 30, 2011.

2. "Bank" shall mean a bank that is exempt from the FTC's jurisdiction pursuant to Section 5(a)(2) of the FTC Act, 15 U.S.C. § 45(a)(2), including Bank of America, N.A. "Bank" shall not include any Person or entity controlled directly or indirectly by a bank that is not itself a bank, such as an operating subsidiary or Affiliate of a bank that is not itself a bank.

3. "First Declaration" shall mean the declaration made pursuant to Paragraph I.E of this Supplemental Order.

4. "Second Declaration" shall mean the declaration made pursuant to Paragraph I.F of this Supplemental Order.

I. MONETARY RELIEF

IT IS HEREBY ORDERED that, in view of the FTC's allegations that BAC Home Loans assessed and/or collected Fees of thirty-six million, one hundred thousand and thirty-four dollars ($36,100,034) in violation of the Consent Decree, and BAC Home Loans' representation in the First Declaration that it has remediated twenty-eight million, forty-two thousand and twenty-four dollars ($28,042,024) of such Fees, resulting in unremediated consumer losses of up to eight million, fifty-eight thousand, and ten dollars ($8,058,010):

A. Judgment is entered in the amount of eight million, fifty-eight thousand, and ten dollars ($8,058,010) to be paid by and through Bank of America Corporation to compensate consumers for losses sustained as a result of BAC Home Loans' alleged violations of Paragraphs I.A, II, V, VI, VII, and XI of the Consent Order.

B. From June 17, 2010, through June 30, 2011, BAC Home Loans, as set forth in the First Declaration, assessed and/or collected Fees of thirty-six million, one hundred thousand and thirty-four dollars ($36,100,034) that the FTC alleges caused violations of Paragraphs II and V of the Consent Order, as set forth in the allegations in Paragraphs F.3 and F.4 of the Findings section. This includes Fees BAC Home Loans assessed and/or collected for Default-Related Services that the FTC alleges are prohibited by the Consent Order, including:

1. Title Fees that the FTC alleges were not Clearly and Prominently disclosed on BAC Home Loans' Fee Schedule in violation of Paragraph V of the Consent Order; and

2. Fees for Default-Related Services that the FTC alleges were not authorized and Clearly and Prominently disclosed by the loan instruments and/or not permitted by law, in violation of Paragraph II of the Consent Order.

C. As set forth in the First Declaration, BAC Home Loans has remediated twenty-eight million, forty-two thousand and twenty-four dollars ($28,042,024) of the Fees set forth in Paragraph I.B by reversing or refunding all such Fees that were assessed to and/or collected from any consumers.

D. BAC Home Loans shall satisfy the judgment in Paragraph I.A by providing to the FTC the First Declaration required by Paragraph I.E and the Second Declaration required by Paragraph I.F that collectively demonstrate it met each of the following conditions:

1. Compensated consumers for all Fees BAC Home Loans assessed and/or collected for Default-Related Services that the FTC has identified and alleges were prohibited by the Consent Order, from June 17, 2010, through June 30, 2011, including:

a. Title Fees that the FTC alleges were not Clearly and Prominently disclosed on BAC Home Loans' Fee Schedule;

b. Fees for Default-Related Services that the FTC alleges were not authorized and Clearly and Prominently disclosed by the loan instruments and/or not permitted by law.

c. Such compensation shall include, at a minimum, reversal or refund of all such Fees for all consumers. Refund checks shall be valid for at least one hundred and eighty (180) days from mailing. If BAC Home Loans or its successor is notified that any checks are undeliverable to a borrower, BAC Home Loans or its successor shall follow the procedures for the delivery of refund checks described in the Subparagraph I.E.2;

2. Made all payments, directly or through its successor, into an interest bearing escrow account as required by Paragraph III.3 of the Consent Judgment filed in United States v. Bank of America Corporation, CV 12-00361 (D.D.C.) (attached as Exhibit A); provided, however, that, if the proposed Consent Judgment filed in United States v. Bank of America Corporation, CV 12-00361 (D.D.C.), is not approved and ordered by that Court within ninety (90) days of entry of this Supplemental Order, then the ...


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