homeowners get about $240 apiece- ftc settlement with countrywide-complaint & consent order here

8/6/2019 HOMEOWNERS GET ABOUT $240 APIECE- FTC SETTLEMENT WITH COUNTRYWIDE-Complaint & Consent Order HERE

http://slidepdf.com/reader/full/homeowners-get-about-240-apiece-ftc-settlement-with-countrywide-complaint 1/42

CALCULATED OUT IT AMOUNTS TO $240 FOR EACH HOMEOWNER!!WOWZIE

For Release: 07/20/2011FTC Returns Nearly $108 Million to 450,000 Homeowners

Overcharged by Countrywide for Loan Servicing FeesThe Federal Trade Commission is mailing 450,177 refund checks worthalmost $108 million to homeowners who were allegedly overcharged byCountrywide Home Loans, Inc. As part of the FTC’s efforts to protectfinancially distressed homeowners, the FTC reached a settlement withCountrywide last year over allegations that the company collected excessivefees from borrowers who were struggling to keep their homes.

“It’s astonishing that a single company could be responsible for overchargingmore than 450,000 homeowners,” FTC Chairman Jon Leibowitz said.

“Countrywide’s unconscionable behavior harmed American consumers on amassive scale and we are proud to be getting every single dollar back tohundreds of thousands of struggling consumers who can least afford to losethe money.” The FTC’s June 2010 settlement order required Countrywide, which is nowowned by Bank of America, to pay $108 million to be used for refunds andbarred the company from taking advantage of borrowers who have fallenbehind on their payments. The refunds are being distributed to consumerswhose loans were serviced by Countrywide between January 1, 2005, andJuly 1, 2008, and who were subject to the company’s allegedly unlawfulpractices.According to the FTC, homeowners who were in default on their loans were

charged excessive fees for services such as property inspections, lawnmowing, and other services meant to protect the lender’s interest in theproperty. Rather than simply hire third-party vendors to perform theservices, Countrywide used subsidiaries to hire the vendors. The subsidiariesallegedly marked up the price of the services charged by the vendors – oftenby 100 percent or more – and Countrywide then charged the homeownersthe marked-up fees. The FTC complaint alleges that the company’s strategywas to increase profits from default-related service fees in bad economictimes.Also, in servicing loans for borrowers trying to save their homes in Chapter

13 bankruptcy proceedings, the FTC alleged that Countrywide made false orunsupported claims to borrowers about amounts owed or the status of theirloans, and added fees and escrow charges to their mortgage accountswithout notice.An administrator working for the FTC will send out refunds to consumerswho were overcharged for property inspections, maintenance services, titlesearches, and foreclosure trustee services, and to those who were in



1 WILLARD K. TOMG e n e r a l Counse l

2LUCY E. MORRIS

3 HEATHER ALLENLYNETTE HOTCHKISS

4 l m o r r i s @ f t c . q o v ; h a l l e n @ f t c . g o v ;l h o t c h k i s s @ f t c . g o v5 F e d e r a l Tr a d e Commission

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Te l : (202) 326-32247 Fax: (202) 326-3768

8 JOHN D. JACOBS (Local Counse l )l j a c o b s @ f t c . g o v

9 C a l i f o r n i a Bar.No . 134154F e d e r a l Trade Commission

10 10877 W i l s h i r e B l v d . , S t e . 700

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17

18

19FEDERAL TRADE COMMISSION,

20P l a i n t i f f ,

21v .

22COUNTRYWIDE HOME LOANS, INC.,

23 a c o r p o r a t i o n , and

24 BAC HOME LOANS SERVICING, LP ,a l i m i t e d p a r t n e r s h i p ,

25D e f e n d a n t s .

2611 _______________________________ ~

27

28

~ v ~ o

COMPLAINT FOR PERMANENTINJUNCTION AND OTHER EQUITABLERELIEF

.

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1 P l a i n t i f f , t h e F e d e r a l Trade Commission ("FTC U

) , f o r i t s

2 Compla in t a l l e g e s :

3 1 . Th e FTC b r i n g s t h i s a c t i o n u n d e r S e c t i o n 13(b) o f t h e

4 F e d e r a l Trade Commission A ct ("FTC A ct U

) , 15 U . S . C . § 53(b ) , t o

5 o b t a i n p e r m a n e n t i n j u n c t i v e r e l i e f , r e s c i s s i o n o r r e f o r m a t i o n o f

6 c o n t r a c t s , r e s t i t u t i o n , t h e r e fund o f monies p a i d , d i s g o rg e m e n t o f

7 i l l - g o t t e n m o n i e s , an d o t h e r e q u i t a b l e r e l i e f f o r D e f e n d a n t s ' a c t s

8 o r p r a c t i c e s i n v i o l a t i o n o f S e c t i o n 5(a) o f t h e FTC Act , 15 U . S . C .

9 § 45 ( a ) .

10

11 2 .

12 U . S . C .

13 5 3 ( b ) .

14 3 .

JURISDICTION AND VENUE

This Cour t has s u b j e c t m a t t e r j u r i s d i c t i o n p u r s u a n t t o 28

1331 , 1 3 3 7 ( a ) , and 1345, and 15 U . S . C . §§ 45(a) and

Venue i s p r o p e r i n t h i s d i s t r i c t under 28 u . s . c . §§

15 1391(b) and ( c ) , and 15 U . S . C . § 5 3 ( b ) .

16 PLAINTIFF

17 4 . Th e FTC i s an i n d e p e n d e n t agency o f t h e Uni t ed S t a t e s

18 Government c r e a t e d by s t a t u t e . 15 U . S . C . §§ 41 5 8 . Th e FTC

19 e n f o r c e s S e c t i o n 5(a) o f t h e FTC Act , 15 U . S . C . § 4 5 ( a ) , which

20 p r o h i b i t s u n f a i r o r d e c e p t i v e a c t s o r p r a c t i c e s i n o r a f f e c t i n g

21 commerce .

22 5 . Th e FTC i s a u t h o r i z e d t o i n i t i a t e f e d e r a l d i s t r i c t c o u r t

23 proceed ings , by i t s own a t t o r n e y s , t o e n j o i n v i o l a t i o n s o f t h e FTC

24 Act and t o s e c u r e such e q u i t a b l e r e l i e f as may be a p p r o p r i a t e i n

25 each c a s e , i n c l u d i n g r e s c i s s i o n o r r e f o r m a t i o n o f c o n t r a c t s ,

26 r e s t i t u t i o n , t he r e fund o f monies p a i d , and t h e d i s g o rg e m e n t o f

27 i l l - g o t t e n monies . 15 U . S . C . §§ 53(b) and 56(a) (2 ) (A) .

28

2



1

2 6 .

DEFENDANTS

D e f e n d a n t C o u n t r y w i d e Home Loans , I n c . ("CHL") i s a New

3 York c o r p o r a t i o n wi t h i t s p r i n c i p a l p l a c e o f b u s i n e s s i n C a l a b a s a s ,

4 CA.

5

CHL t r a n s a c t s o r h as t r a n s a c t e d b u s i n e s s i n t h i s d i s t r i c t .

7 . D e f e n d a n t BAC Home Loans S e r v i c i n g , LP ("BAC S e r v i c i n g " ) ,

6 f o r m e r l y d o i n g b u s i n e s s as C o u n t r y w i d e Home Loans S e r v i c i n g , LP, i s

7 a Texas l i m i t e d p a r t n e r s h i p wi th i t s p r i n c i p a l p l a c e o f b u s i n e s s i n

8 C a l a b a s a s , CA. BAC S e r v i c i n g t r a n s a c t s o r h as t r a n s a c t e d b u s i n e s s

9 i n t h i s d i s t r i c t .

10 8 . D e f e n d a n t s o p e r a t e a m o r t g a g e s e r v i c i n g b u s i n e s s t h a t

11 s e r v i c e s m i l l i o n s o f home l o a n s a n n u a l l y . D e f e n d a n t s have o p e r a t e d

12 a s a common e n t e r p r i s e w h i l e e n g a g i n g i n t h e u n l a w f u l a c t s and

13 p r a c t i c e s a l l e g e d be low. Because D e f e n d a n t s have o p e r a t e d a s a

14 common e n t e r p r i s e , e a c h o f them i s j o i n t l y an d s e v e r a l l y l i a b l e f o r

15 t h e a c t s and p r a c t i c e s a l l e g e d b e l o w.

16

17 9 .

COMMERCE

At a l l t i m e s m a t e r i a l t o t h i s C o m p l a i n t , D e f e n d a n t s have

18 m a i n t a i n e d a s u b s t a n t i a l c o u r s e o f t r a d e i n o r a f f e c t i n g commerce ,

19 a s "commerce" i s d e f i n e d i n S e c t i o n 4 o f t h e FTC A c t , 15 U . S . C . §

20 44.

21

22 1 0 .

NATURE OF ENFORCEMENT ACTION

T h i s e n f o r c e m e n t a c t i o n i s b r o u g h t t o remedy u n l a w f u l

23 a c t s and p r a c t i c e s by D e f e n d a n t s i n s e r v i c i n g m o r t g a g e l o a n s f o r a

24 p a r t i c u l a r l y v u l n e r a b l e c l a s s o f c o n s u m e r s : b o r r o w e r s i n f i n a n c i a l

25 d i s t r e s s who a r e s t r u g g l i n g t o keep t h e i r homes. Many o f t h e l o a n s

26 s e r v i c e d by D e f e n d a n t s a r e r i s k y , h i g h - c o s t l o a n s t h a t h a d b e e n

27 o r i g i n a t e d o r funded by D e f e n d a n t s ' p a r e n t company, Count rywide

28

3



DEFENDANTS' BUSINESS PRACTICES

2 12 . P r i o r t o J u l y 1, 2008, when Count rywide was a c q u i r e d by

3 Bank o f America C o r p o r a t i o n , Countrywide produced hundreds o f

4 b i l l i o n s o f d o l l a r s i n mortgage l o a n s each y e a r . Defendan t s , a s

5 Count rywide s u b s i d i a r i e s , have been th e mortgage s e r v i c e r f o r many

6 o f t h e s e l o a n s . In many i n s t a n c e s , Count rywide packaged i t s l o a n s

7 i n t o mor tgage -backed s e c u r i t i e s and s o l d them t o i n v e s t o r s on t h e

8 secondary marke t . coun t rywide o f t e n r e t a i n e d t h e r i g h t t o s e r v i c e

9 l o a n s i t s e c u r i t i z e d , and Defendants have s e r v i c e d t h e s e l o a n s

10 p u r s u a n t t o s e r v i c i n g agreements w i t h t h e i n v e s t o r s . A f t e r J u l y 1,

11 2008, Defendants have c o n t i n u e d t o s e r v i c e m i l l i o n s o f mortgage

12 l o a n s , i n c l u d i n g t e n s o f t housands o f l o a n s i n v o l v i n g bor rowers i n

13 b a n k r u p t c y and f o r e c l o s u r e . Defendants now do b u s i n e s s under t h e

14 b r a n d name o f "Bank o f America Home Loans . "

15 13 . Many o f t h e l o a n s s e r v i c e d by Defendants a r e subpr ime o r

16 " n o n t r a d i t i o n a l " mortgages such as pay o p t i o n a d j u s t a b l e r a t e

17 mor tgages ("ARMs"), i n t e r e s t - o n l y mor tgages , and l o a n s made w i t h18 l i t t l e o r no income o r a s s e t documen ta t ion . In r e c e n t y e a r s ,

19 Countrywide produced an i n c r e a s i n g number o f such l o a n s , and

20 Defendan t s ' l oan s e r v i c i n g p o r t f o l i o grew s i g n i f i c a n t l y . In March

21 2008, p r i o r t o b e i n g a c q u i r e d by Bank o f America C o r p o r a t i o n ,

22 Count rywide was ranked a s th e t o p mortgage s e r v i c e r i n t h e Uni ted

23 S t a t e s and had a s e r v i c i n g p o r t f o l i o wi th a ba lance o f o v e r $1.4

24 t r i l l i o n . In September 2009 , a f t e r i t s a c q u i s i t i o n o f Countrywide ,

25 Bank o f Amer ica wa s r anked a s t h e n a t i o n ' s to p mortgage s e r v i c e r

26 w i t h a s e r v i c i n g p o r t f o l i o o f ove r $2.1 t r i l l i o n .

27

28

5



1 1 4 . When a b o r r o w e r becomes d e l i n q u e n t on a mortgage l o a n ,

2 mortgage s e r v i c e r s o r d e r v a r i o u s d e f a u l t - r e l a t e d s e r v i c e s t h a t a r e

3 i n t e n d e d t o p r o t e c t t h e l e n d e r ' s i n t e r e s t i n t h e p r o p e r t y . Fo r

4 example , a mortgage s e r v i c e r may o r d e r a p r o p e r t y i n s p e c t i o n f o r

5 t h e p u r p o s e o f v e r i f y i n g t h e occupancy s t a t u s o f t h e home. In i t s

6 mortgage s e r v i c i n g o p e r a t i o n , Count rywide f o l l o w s a s o - c a l l e d

7 " v e r t i c a l i n t e g r a t i o n s t r a t e g y u t o g e n e r a t e d e f a u l t - r e l a t e d fee

8 income. Ra th e r t han o b t a i n d e f a u l t - r e l a t e d s e r v i c e s d i r e c t l y from

9 t h i r d - p a r t y v e n d o r s and c h a rg e b o r r o w e r s f o r t h e a c t u a l c o s t o f

10 t h e s e s e r v i c e s , Count rywide formed s u b s i d i a r i e s t o a c t as m i d d l e -

11 men i n th e d e f a u l t s e r v i c e s p r o c e s s ( " d e f a u l t s u b s i d i a r i e s U) Th e

12 d e f a u l t s u b s i d i a r i e s e x i s t s o l e l y t o g e n e r a t e r e v e n u e s f o r

13 Count rywide and do n o t o p e r a t e a t arms l e n g t h w i t h D e f e n d a n t s .

14 15 . The scheme works a s f o l l o w s . D e f e n d a n t s o r d e r d e f a u l t -

15 r e l a t e d s e r v i c e s from t h e d e f a u l t s u b s i d i a r i e s , which i n t u r n

16 o b t a i n t h e s e r v i c e s from t h i r d - p a r t y v e n d o r s . Th e d e f a u l t

17 s u b s i d i a r i e s t h e n cha rge Defendants a f e e s i g n i f i c a n t l y marked up

18 from t h e t h i r d - p a r t y v e n d o r s ' fe e f o r t h e s e r v i c e , and t h e

19 D e f e n d a n t s , i n t u r n , a s s e s s and c o l l e c t t h e s e marked-up f e e s from

20 b o r r o w e r s . As a r e s u l t , even a s t h e mortgage m a r k e t c o l l a p s e d , an d

21 more b o r r o w e r s f e l l i n t o d e l i n q u e n c y i n r e c e n t y e a r s , Count rywide

22 e a r ned s u b s t a n t i a l p r o f i t s by f u n n e l i n g d e f a u l t - r e l a t e d s e r v i c e s

23 t h r o u g h i t s d e f a u l t s u b s i d i a r i e s . As s t a t e d by Count rywide i n an

24 October 2007 Earn i ngs C a l l , t h e company ' s s t r a t e g y wa s t o p r o f i t

25 from d e f a u l t - r e l a t e d s e r v i c e s i n down t i m e s s u c h a s t h e c u r r e n t

26 mortgage c r i s i s :

27

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6



1 NOw, we a r e f r e q u e n t l y a s k e d what t h e impac t o f

2 o u r s e r v i c i n g c o s t s and e a r n i n g s w i l l be from

3 i n c r e a s e d d e l i n q u e n c i e s and [ l o s s ] m i t i g a t i o n

4 e f f o r t s , and what happens t o c o s t s . And what

5 we p o i n t o u t i s , a s I w i l l now, i s t h a t

6 i n c r e a s e d o p e r a t i n g e x p e n s e s i n t imes l i k e t h i s

7 t e n d t o b e f u l l y o f f s e t by i n c r e a s e s i n

8 a n c i l l a r y income i n o u r s e r v i c i n g o p e r a t i o n ,

9 g r e a t e r fe e income from i t e m s l i k e l a t e

10 c h a r g e s ,and

i m p o r t a n t l y from i n - s o u r c e dvendor

11 f u n c t i o n s t h a t r e p r e s e n t p a r t o f o u r

12 d i v e r s i f i c a t i o n s t r a t e g y , a c o u n t e r - c y c l i c a l

13 d i v e r s i f i c a t i o n s t r a t e g y s u c h as o ur b u s i n e s s e s

14 i n v o l v e d i n f o r e c l o s u r e t r u s t e e and d e f a u l t

15 t i t l e s e r v i c e s and p r o p e r t y i n s p e c t i o n

16 s e r v i c e s .

17 (See S t a t e m e n t o f David Sambol , P r e s i d e n t , C h i e f O p e r a t i n g O f f i c e r ,

18 and D i r e c t o r o f Count rywide F i n a n c i a l C o r p o r a t i o n . )

19 16 . The mortgage c o n t r a c t be tween a l e n d e r and b o r r o w e r

20 t y p i c a l l y c o n s i s t s o f two documents : t h e p r o m i s s o r y n o t e ( "No t e " ) ,

21 and t h e mortgage o r d e e d o f t r u s t ( " S e c u r i t y I n s t r u m e n t " ) Th e

22 mortgage c o n t r a c t s s e r v i c e d by Defendants a r e s u b s t a n t i a l l y s i m i l a r

23 t o t h e s t a n d a r d F a n n i e Mae/Freddie Mac form c o n t r a c t s and c o n t a i n

24 form l anguage r e g a r d i n g what o c c u r s i f a b o r r o w e r d e f a u l t s on h i s

25 o r h e r l o a n . The S e c u r i t y I n s t r u m e n t a u t h o r i z e s t h e s e r v i c e r , i n

26 c a s e s o f d e f a u l t , t o :

27

28

7



1

2

3

4

5

6

p a y f o r w h a t e v e r i s r e a s o n a b l e o r a p p r o p r i a t e

t o p r o t e c t t h e n o t e h o l d e r ' s i n t e r e s t i n t h e

p r o p e r t y a nd r i g h t s u n d e r t h e s e c u r i t y

i n s t r u m e n t , r n c l u d i n g p r o t e c t i n g a n d / o r

a s s e s s i n g t h e v a l u e o f t h e p r o p e r t y , an d

s e c u r i n g a n d / o r r e p a i r i n g t h e p r o p e r t y .

7 The S e c u r i t y I n s t r u m e n t f u r t h e r p r o v i d e s t h a t an y s u c h amounts

8 " d i s b u r s e d b y" t h e s e r v i c e r s h a l l become a d d i t i o n a l d e b t o f t h e

9 b o r r o w e r s e c u r e d by t h e S e c u r i t y I n s t r u m e n t an d s h a l l b e a r i n t e r e s t

10 a t t h e Note r a t e " f rom t h e d a t e o f d i s b u r s e m e n t . " R e g a r d i n g t h e

11 payment o f f o r e c l o s u r e f e e s i n t h e e v e n t o f d e f a u l t , t h e Note

12 p r o v i d e s t h a t t h e n o t e h o l d e r :

13

14

15

16

17

w i l l have t h e r i g h t t o b e p a i d b a c k by me f o r

a l l o f i t s c o s t s an d e x p e n s e s i n e n f o r c i n g t h i s

Note t o t h e e x t e n t n o t p r o h i b i t e d b y a p p l i c a b l e

l a w. Those e x p e n s e s i n c l u d e , f o r example ,

r e a s o n a b l e a t t o r n e y s ' f e e s .

18 Thus , t h e m o r t g a g e c o n t r a c t a l l o w s t h e s e r v i c e r t o pay f o r d e f a u l t -

19 r e l a t e d s e r v i c e s when n e c e s s a r y o r a p p r o p r i a t e , a nd t o b e

20 r e i m b u r s e d by t h e b o r r o w e r , b u t i t d o e s n o t a u t h o r i z e t h e s e r v i c e r

21 t o mark up t h e a c t u a l c o s t o f t h o s e s e r v i c e s t o make a p r o f i t .

22 1 7 . In c h a r g i n g marked-up f e e s f o r d e f a u l t s e r v i c e s ,

23 D e f e n d a n t s have v i o l a t e d t h e m o r t g a g e c o n t r a c t by c h a r g i n g

24 b o r r o w e r s f o r d e f a u l t s e r v i c e s t h a t e x c e e d t h e a c t u a l c o s t o f t h e

25 s e r v i c e s an d t h a t a r e n o t r e a s o n a b l e and a p p r o p r i a t e t o p r o t e c t t h e

26 n o t e h o l d e r ' s i n t e r e s t i n t h e p r o p e r t y and r i g h t s u n d e r t h e

27 s e c u r i t y i n s t r u m e n t .

28

In a d d i t i o n , D e f e n d a n t s have c h a r g e d

8



1 bo r rower s f o r t h e p e r f o r m a n c e o f d e f a u l t s e r v i c e s , s u c h a s p r o p e r t y

2 i n s p e c t i o n s and t i t l e r e p o r t s , t h a t i n some i n s t a n c e s were n o t

3 r e a s o n a b l e and a p p r o p r i a t e t o p r o t e c t t h e n o t e h o l d e r ' s i n t e r e s t i n

4 t h e p r o p e r t y and r i g h t s u n d e r t h e s e c u r i t y i n s t r u m e n t .

5 18 . c o u n t r y w i d e F i e l d S e r v i c e s Corpora t i on ("CFSC") , now

6 d o i n g b u s i n e s s as BAC F i e l d S e r v i c e s C o r p o r a t i o n , i s one o f t h e

7 d e f a u l t s u b s i d i a r i e s used b y Defendants i n s e r v i c i n g b o r r o w e r s '

8 mortgage l o a n s . U n t i l a t l e a s t J u l y 1 , 2008, CFSC was a s u b s i d i a r y

9 o f D e f e n d a n t CHL. D e f e n d a n t s o r d e r p r o p e r t y i n s p e c t i o n s and

10 p r o p e r t y p r e s e r v a t i o n s e r v i c e s , such a s lawn c u t s , from CFSC, which

11 i n t u r n o r d e r s t h e s e r v i c e s from t h i r d - p a r t y v e n d o r s . Th e vendors

12 c h a rg e CFSC p r i c e s f o r t h e p e r f o r m a n c e o f t h e s e s e r v i c e s , which

13 p r i c e s CFSC t h en marks up i n numerous i n s t a n c e s by 100% o r more

14 b e f o r e " c h a rg i n g " them t o D e f e n d a n t s . D e f e n d a n t s t h en c h a rg e t h e

15 marked-up f e e s t o t h e b o r r o w e r. Defendants c o l l e c t t h e s e marked-up

16 f e e s from b o r r o w e r s t h r o u g h v a r i o u s means, i n c l u d i n g i n c o n n e c t i o n

17 wi th repayment p l a n s , r e i n s t a t e m e n t s , p a y o f f s , b a n k r u p t c y p l a n s ,

18 an d f o r e c l o s u r e s .

19 19 . D e f e n d a n t s o b t a i n s e r v i c e s t h rough o t h e r d e f a u l t

20 s u b s i d i a r i e s i n s i m i l a r f a s h i o n and t h e n cha rge b o r r o w e r s f e e s f o r

21 d e f a u l t s e r v i c e s t h a t a r e s u b s t a n t i a l l y marked up from t h e a c t u a l

22 c o s t o f t h e s e r v i c e s . These o t h e r d e f a u l t s u b s i d i a r i e s a r e

23 LandSafe D e f a u l t , I n c . , a l s o known a s LandSafe N a t i o n a l D e f a u l t ,

24 ( "LandSafe" ) and R e c o n Tr u s t Company, N . A . ( "ReconTrus t " ) .

25 Defendants o r d e r p r e - f o r e c l o s u r e t i t l e r e p o r t s from LandSafe a t t h e

26 v e r y b e g i n n i n g o f a f o r e c l o s u r e r e f e r r a l . As soon as t h e r e p o r t i s

27 comple ted , t h e b o r r o w e r i s b i l l e d f o r i t , and Defendants s e n d th e

28

9



1 r e p o r t w i t h t h e f o r e c l o s u r e r e f e r r a l t o a f o r e c l o s u r e a t t o r n e y o r

2 t r u s t e e . In many i n s t a n c e s , D e f e n d a n t s s e n d f o r e c l o s u r e r e f e r r a l s

3 t o R e c o n Tr u s t . R e c o n Tr u s t a c t s a s t h e D e f e n d a n t s ' f o r e c l o s u r e

4 t r u s t e e i n n o n - j u d i c i a l f o r e c l o s u r e s t a t e s , s u c h a s C a l i f o r n i a .

5 LandSafe h i r e s v e n d o r s t o p e r f o r m p r e - f o r e c l o s u r e t i t l e s e r v i c e s

6 and t h e n " c h a r g e s " . f e e s t o D e f e n d a n t s f o r t h o s e s e r v i c e s t h a t a r e

7 s u b s t a n t i a l l y marked up f rom t h e v e n d o r s ' p r i c e s . L i k e w i s e ,

8 R e c o n Tr u s t p r o v i d e s f o r e c l o s u r e t r u s t e e s e r v i c e s t h a t have b e e n

9 s u b s t a n t i a l l y marked up f rom t h e a c t u a l c o s t o f t h e s e r v i c e s .

10 D e f e n d a n t s t h e n p a s s on t h e s e marked-up f e e s t o b o r r o w e r s .

11 20 . D e f e n d a n t s s e r v i c e t e n s o f t h o u s a n d s o f m o r t g a g e l o a n s

12 f o r b o r r o w e r s wh o a r e i n C h a p t e r 13 b a n k r u p t c y, t h e p u r p o s e o f

13 which i s t o a l l o w consumers t o keep t h e i r homes and emerge f rom

14 b a n k r u p t c y w i t h a " f r e s h s t a r t . " In c o n n e c t i o n w i t h t h e s e

15 b a n k r u p t c y c a s e s and i n numerous i n s t a n c e s , i n c l u d i n g i n b a n k r u p t c y

16 f i l i n g s s u c h a s p r o o f s o f c l a i m and m o t i o n s f o r r e l i e f f rom s t a y ,

17 D e f e n d a n t s have made r e p r e s e n t a t i o n s t o b o r r o w e r s a b o u t t h e i r

18 m o r t g a g e l o a n s t h a t a r e f a l s e o r l a c k a r e a s o n a b l e b a s i s .

19 D e f e n d a n t s f a i l e d t o a d o p t a d e q u a t e p o l i c i e s an d p r o c e d u r e s t o

20 e n s u r e t h e a c c u r a c y o f t h e i r r e p r e s e n t a t i o n s , and t h e y u s e d

21 a n t i q u a t e d t e c h n o l o g y t h a t l e d t o numerous i n a c c u r a c i e s i n

22 s e r v i c i n g l o a n s i n b a n k r u p t c y, i n c l u d i n g payment p o s t i n g e r r o r s and

23 t h e a s s e s s m e n t o f u n a u t h o r i z e d f e e s . D e f e n d a n t s a l s o have f a i l e d

24 t o d i s c l o s e t o b o r r o w e r s d u r i n g t h e i r b a n k r u p t c y c a s e when f e e s and

25 esc row d e f i c i e n c i e s an d s h o r t a g e s have a c c r u e d on t h e i r l o a n .

26 A f t e r t h e b a n k r u p t c y c a s e h a s c l o s e d and b o r r o w e r s no l o n g e r have

27

28

10



1 t h e p r o t e c t i o n o f t h e b a n k r u p t c y c o u r t , D e f e n d a n t s s e e k t o c o l l e c t

2 t h o s e amounts , i n c l u d i n g i n some c a s e s t h r o u g h f o r e c l o s u r e a c t i o n s .

3 VIOLATIONS OF THE FTC ACT

4 2 1 . S e c t i o n 5 ( a ) o f t h e FTC A c t , 15 U . S . C . § 4 5 ( a ) , p r o h i b i t s

5 " u n f a i r o r d e c e p t i v e a c t s o r p r a c t i c e s i n o r a f f e c t i n g commerce . "

6 2 2 . M i s r e p r e s e n t a t i o n s o r d e c e p t i v e o m i s s i o n s o f m a t e r i a l

7 f a c t c o n s t i t u t e d e c e p t i v e a c t s o r p r a c t i c e s p r o h i b i t e d by S e c t i o n

8 5 ( a ) o f t h e FTC A c t . A c t s o r p r a c t i c e s a r e u n f a i r u n d e r S e c t i o n 5

9 o f t h e FTC A ct i f t h e y c a u s e o r a r e l i k e l y t o c a u s e s u b s t a n t i a l

10 i n j u r y t o consumers t h a t consumers c a n n o t r e a s o n a b l y a v o i d

11 t h e m s e l v e s an d t h a t i s n o t o u t w e i g h e d by c o u n t e r v a i l i n g b e n e f i t s t o

12 consumers o r c o m p e t i t i o n . 15 U . S . C . § 4 5 ( n ) .

13

14 23 .

Count I : M i s r e p r e s e n t a t i o n o f Amounts Owed

In t h e c o u r s e and c o n d u c t o f t h e i r l o a n s e r v i c i n g and

15 c o l l e c t i o n , D e f e n d a n t s i n numerous i n s t a n c e s have r e p r e s e n t e d ,

16 d i r e c t l y o r i n d i r e c t l y , e x p r e s s l y o r by i m p l i c a t i o n , t h a t consumers

17 a r e o b l i g a t e d t o p ay t h e amounts s p e c i f i e d i n D e f e n d a n t s '18 c o m m u n i c a t i o n s f o r d e f a u l t - r e l a t e d s e r v i c e s s u c h a s p r o p e r t y

19 i n s p e c t i o n s , t i t l e r e p o r t s , and f o r e c l o s u r e t r u s t e e s e r v i c e s .

20 24 . In t r u t h and i n f a c t , i n numerous i n s t a n c e s , consumers

21 a r e n o t o b l i g a t e d t o pay t h e amounts t h a t have been s p e c i f i e d i n

22 D e f e n d a n t s ' c o m m u n i c a t i o n s f o r d e f a u l t r e l a t e d s e r v i c e s s u c h a s

23 p r o p e r t y i n s p e c t i o n s , t i t l e r e p o r t s , and f o r e c l o s u r e t r u s t e e

24 s e r v i c e s . D e f e n d a n t s i n c l u d e i n t h e amounts t h e y r e p r e s e n t a s owed

25 f e e s t h a t have been marked up beyond t h e a c t u a l c o s t o f t h e

26 s e r v i c e s a n d / o r f e e s t h a t a r e f o r t h e p e r f o r m a n c e o f u n n e c e s s a r y o r

27 u n r e a s o n a b l e s e r v i c e s , i n v i o l a t i o n o f t h e m o r t g a g e c o n t r a c t .

28

11



1 2 5 . T h e r e f o r e , D e f e n d a n t s ' r e p r e s e n t a t i o n s a s s e t f o r t h i n

2 P a r a g r a p h 23 o f t h i s C o m p l a i n t a r e f a l s e o r m i s l e a d i n g and

3 c o n s t i t u t e d e c e p t i v e a c t s o r p r a c t i c e s i n v i o l a t i o n o f S e c t i o n 5 ( a )

4 o f t h e FTC A c t , 15 U.S .C . § 4 S ( a ) .

5 Count I I : U n f a i r Assessment and C o l l e c t i o n o f F e e s

6 26. I n t h e c o u r s e an d c o n d u c t o f t h e i r l o a n s e r v i c i n g and

7 c o l l e c t i o n , D e f e n d a n t s i n numerous i n s t a n c e s have a s s e s s e d and

8 c o l l e c t e d d e f a u l t - r e l a t e d f e e s t h a t t h e y were n o t l e g a l l y

9 a u t h o r i z e d t o a s s e s s and c o l l e c t p u r s u a n t t o t h e m o r t g a g e c o n t r a c t .

10 27. D e f e n d a n t s ' a c t i o n s c a u s e o r a r e l i k e l y t o c a u s e

11 s u b s t a n t i a l i n j u r y t o c o n s u m e r s t h a t consumers c a n n o t r e a s o n a b l y

12 a v o i d t h e m s e l v e s an d t h a t i s n o t o u t w e i g h e d by c o u n t e r v a i l i n g

13 b e n e f i t s t o consumers o r c o m p e t i t i o n .

14 28 . T h e r e f o r e , D e f e n d a n t s ' p r a c t i c e s a s d e s c r i b e d i n

15 P a r a g r a p h 26 above c o n s t i t u t e u n f a i r a c t s o r p r a c t i c e s i n v i o l a t i o n

16 o f S e c t i o n 5 o f t h e FTC A c t , 15 U.S .C . § 4 5 ( a ) and 4 5 ( n ) .

17

18 29 .

Count I I I : D e c e p t i v e Claims i n Bankruptcy S e r v i c i n g

I n t h e c o u r s e an d c o n d u c t o f s e r v i c i n g l o a n s i n

19 b a n k r u p t c y, D e f e n d a n t s i n numerous i n s t a n c e s h a v e made

20 r e p r e s e n t a t i o n s a b o u t d i f f e r e n t a s p e c t s o f c o n s u m e r s ' l o a n s ,

21 i n c l u d i n g amoun t s owed f o r p r e - p e t i t i o n a r r e a r a g e a nd t h e amount

22 and d e l i n q u e n c y s t a t u s o f p o s t - p e t i t i o n p a y m e n t s .

23 3 0 . In t r u t h and i n f a c t , i n numerous i n s t a n c e s , t h e

24 r e p r e s e n t a t i o n s s e t f o r t h i n P a r a g r a p h 29 a r e f a l s e o r m i s l e a d i n g

25 o r D e f e n d a n t s d i d n o t have a r e a s o n a b l e b a s i s f o r t h e

26 r e p r e s e n t a t i o n s a t t h e t i m e t h e r e p r e s e n t a t i o n s were made.

27

28

12



1 3 1 . T h e r e f o r e , t h e making o f t h e r e p r e s e n t a t i o n s a s s e t f o r t h

2 i n P a r a g r a p h 29 o f t h i s C o m p l a i n t c o n s t i t u t e s a d e c e p t i v e a c t o r

3 p r a c t i c e i n o r a f f e c t i n g commerce i n v i o l a t i o n o f S e c t i o n 5 ( a ) o f

4 t h e FTC Act , 15 U . S . C . § 4 5 ( a ) .

5

6

Count IV: Unfa i r C o l l e c t i o n o f Hidden Bankruptcy Fees

3 2 . In numerous i n s t a n c e s , D e f e n d a n t s h a v e f a i l e d t o d i s c l o s e

7 a d e q u a t e l y t o b o r r o w e r s d u r i n g t h e i r b a n k r u p t c y c a s e when f e e s and

8 escrow d e f i c i e n c i e s and s h o r t a g e s have a c c r u e d on t h e i r l o a n .

9 A f t e r t h e b a n k r u p t c y c a s e h as c l o s e d an d b o r r o w e r s no l o n g e r have

10 t h e p r o t e c t i o n o f t h e b a n k r u p t c y c o u r t , Defendants s eek t o c o l l e c t

11 t h o s e amounts , i n c l u d i n g t h r o ugh f o r e c l o s u r e a c t i o n s .

12 3 3 . D e f e n d a n t s ' a c t i o n s c a u s e o r a r e l i k e l y t o c a u s e

13 s u b s t a n t i a l i n j u r y t o consumers t h a t consumers c a n n o t r e a s o n a b l y

14 a v o i d t h e m s e l v e s an d t h a t i s n o t o u t w e i g h e d b y c o u n t e r v a i l i n g

15 b e n e f i t s t o consumers o r c o m p e t i t i o n .

16 34 . T h e r e f o r e , D e f e n d a n t s ' p r a c t i c e s as d e s c r i b e d i n

17 P a r a g r a p h 32 above c o n s t i t u t e u n f a i r a c t s o r p r a c t i c e s i n v i o l a t i o n

18 o f S e c t i o n 5 o f t h e FTC Act , 15 U . S . C . § § 45(a) and 4 5 ( n ) .

1 9 CONSUMER INJURY

20 3 5 . Consumers have s u f f e r e d and w i l l c o n t i n u e t o s u f f e r

21 s u b s t a n t i a l i n j u r y a s a r e s u l t o f Defendan t s ' v i o l a t i o n s o f t h e FTC

22 Act . In a d d i t i o n , Defendants have been u n j u s t l y e n r i c h e d a s a

23 r e s u l t o f t h e i r u n l a w f u l a c t s o r p r a c t i c e s . Absent i n j u n c t i v e

24 r e l i e f by t h i s C o u r t , D e f e n d a n t s a r e l i k e l y t o c o n t i n u e t o i n j u r e

25 consumers , r e ap u n j u s t e n r i c h m e n t , and harm t h e p u b l i c i n t e r e s t .

26

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28

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1 Dated : June 7 , 2010

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R e s p e c t f u l l y s u b m i t t e d ,

WILLARD K. TOM

G e n e r a l Counse l

~ ~ ~ .L u ~ o r r i sH e a t h e r Al lenLy n e t t e H o t c h k i s sl m o r r i s @ f t c . g o v ; h a l l e n @ f t c . q o v ;l h o t c h k i s s @ f t c . g o vF e d e r a l Trade Commission600 P e n n s y l v a n i a Avenue, N.W.Wash ing ton , D.C. 20580Te l : (202) 326 -3224Fax: (202) 326-3768

~ ~ ~ -Jo n D. Jaco s (Local Counse l ). " cobs@f tc . ov

Ca i f o r n i a Bar No . 134154F e d e r a l Trade Commission10877 W i l s h i r e B l v d . , S t e . 70 0Los Ange les , CA 90024Te l : (310) 824-4343Fax: ( 31 0 ) 8 2 4 - 4 3 8 0

A t t o r n e y s f o r P l a i n t i f fF e d e r a l Trade Commission

15



Case 2:10-cv-04193-JFW -SS Document 6 Filed 06/15/10 Page 1 of 25

1 WILLARD K. TOMG e n e r a l Counse l

2LUCY E. MORRIS

3 HEATHER ALLENLYNETTE HOTCHKISS

4 I m o r r i s @ f t c . g o v j h a l l e n @ f t c . g o v ; .I h o t c h k i s s @ f t c . g o v

5 F e d e r a l Trade Commiss ion60 0 Pennsy lvan ia Avenue, N.W.

6 Wash ing ton , D.C. 20580Te l : (202) 326-3224

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13 A t t o r n e y s f o r t h e P l a i n t i f fF e d e r a l Trade Commiss ion

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15 UNITED STATES DISTRICT COURT

16 CENTRAL DISTRICT OF CALIFORNIA

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19 FEDERAL TRADE COMMISSION,))

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) Case No .20 P l a i n t i f f , )

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21 v . )) CONSENT JUDGMENT AND ORDER

22 COUNTRYWIDE HOME LOANS, INC. , )

a c o r p o r a t i o n , and )23 )

BAC HOME LOANS SERVICING, LP , )24 a l i m i t e d p a r t n e r s h i p , )

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25 D e f e n d a n t s . ))

26

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28 IT IS HEREBY ORDERED, ADJUDGED and DECREED, p u r s u a n t t o and i n

accordance wi th t h e S t i p u l a t i o n f o r E n t r y o f Consen t Judgment and




1 O r d e r e n t e r e d i n t o by and be tween p l a i n t i f f th e F e d e r a l Trade

2 Commission ("FTC" o r "Commiss ion") and d e f e n d a n t s Coun t rywide Horne

3 Loans , I n c . and BAC Horne Loans S e r v i c i n g LP ( p l a i n t i f f and

4 d e f e n d a n t s a r e c o l l e c t i v e l y r e f e r r e d t o as " t h e p a r t i e s " ) , a s

5 f o l l o w s :

6

7 1 .

Find ings

This Cour t h as j u r i s d i c t i o n o v e r Defendan t s and t h e

8 s u b j e c t m a t t e r o f t h i s a c t i o n . Venue i n t h e C e n t r a l D i s t r i c t o f

9 C a l i f o r n i a i s p r o p e r .

10 2 . Th e Compla in t s t a t e s a c l a i m upon which r e l i e f may be

1 1 g r a n t e d a g a i n s t Defendan t s under S e c t i o n s 5(a ) and 13(b ) o f t h e FTC

12 Act , 15 U.S.C. § § 45(a ) and 5 3 ( b ) .

13 3 . Th e a c t i v i t i e s o f Defendan t s a r e In o r a f f e c t i n g commerce,

14 a s "commerce" i s d e f i n e d i n S e c t i o n 4 o f t h e FTC Act , 15 U.S .C .

15 § 44.

16 4 . Defendan t s have n o t a d m i t t e d any o f t h e a l l e g a t i o n s o f

17 wrongdoing s e t f o r t h i n t h e Compla in t , and e n t r y o f t h i s O r d e r i s

18 n o t an admiss ion o f any such a l l e g a t i o n s o f wrongdoing o r v i o l a t i o n

19 o f law. N o n e t h e l e s s , Defendan t s s t i p u l a t e and a g r e e t o e n t r y o f

20 t h i s O r d e r i n o r d e r t o s e t t l e and r e s o l v e t h e s e d i s p u t e s . The

21 Compla in t does n o t a l l e g e any wrongdoing by Bank o f America , N.A.

22 5 . P l a i n t i f f and Defendan t s waive a l l r i g h t s t o seek j u d i c i a l

23 review o r o t h e r w i s e c o n t e s t t h e v a l i d i t y o f t h i s Order, and

24 Defendan t s waive any r i g h t t h a t ma y a r i s e u n d e r t h e Equa l Acces s t o

25 J u s t i c e Act , 28 U.S .C . § 2412.

26 6. Ent ry o f t h i s O r d e r i s i n t h e p u b l i c i n t e r e s t .

27 7 . The p a r t i e s , by and t h r o u g h t h e i r c o u n s e l , have agreed

28 t h a t e n t r y o f t h i s O r d e r r e s o l v e s a l l m a t t e r s i n d i s p u t e be tween

2




1 them a r i s i n g from t h e f a c t s and c i r c u m s t a n c e s a l l e g e d i n t h e

2 Compla in t i n t h i s a c t i o n , up t o t h e d a t e o f e n t r y o f t h i s Order.

3 D e f i n i t i o n s

4 For p u r p o s e s o f t h i s O r d e r, t h e f o l l o w i n g d e f i n i t i o n s s h a l l

5 a p p l y :

6 1 . " A f f i l i a t e " s h a l l mean an o r g a n i z a t i o n t h a t owns o r

7 c o n t r o l s , i s owned o r c o n t r o l l e d by, o r i s under common ownersh ip o r

8 c o n t r o l w i t h , a n o t h e r o r g a n i z a t i o n ;

9 2 . "BAC Home Loans S e r v i c i n g " s h a l l mean BAC Home Loans

10 S e r v i c i n g , LP, f o r m e r l y do ing b u s i n e s s a s Countrywide Home Loans

11 S e r v i c i n g , LP , and i t s s u c c e s s o r s and a s s i g n s , by whateve r names

12 t h e y migh t be known, b u t n o t i n c l u d i n g any Bank;

13 3 . "Bank" s h a l l mean a bank t h a t i s exempt from th e FTC's

14 j u r i s d i c t i o n p u r s u a n t t o S e c t i o n 5(a ) (2 ) o f th e FTC Act , 15 U.S.C.

15 § 45 (a) (2 ) , i n c l u d i n g Bank o f America , N.A. "Bank" s h a l l n o t

16 i n c l u d e any Person o r e n t i t y c o n t r o l l e d d i r e c t l y o r i n d i r e c t l y by a

17 bank and t h a t i s n o t i t s e l f a bank , such as an o p e r a t i n g s u b s i d i a r y

18 o r A f f i l i a t e o f a bank t h a t i s n o t i t s e l f a bank;

19 4. "Chap te r 13 Bankrup tcy" s h a l l mean any bankrup tcy c a s e

20 f i l e d under Chapte r 13 o f T i t l e 11 o f t h e United S t a t e s Code, 11

21 U.S.C. § § 1301-1330;

22 5 . " C l e a r and Prominen t " o r " C l e a r l y and Prominen t ly" s h a l l

23 mean t h a t i n f o r m a t i o n i s d i s p l a y e d i n a manner t h a t i s r e a d i l y

24 n o t i c e a b l e , r e a d a b l e , and u n d e r s t a n d a b l e ;

25 6. "Competent and R e l i a b l e Evidence" s h a l l mean t e s t s ,

26 a n a l y s e s , r e s e a r c h , s t u d i e s , o r o t h e r e v i d e n c e , i n c l u d i n g a d a t a

27 i n t e g r i t y program t h a t compl ies wi th S e c t i o n XI o f t h i s Order, based

28 on t h e e x p e r t i s e o f p r o f e s s i o n a l s i n t h e r e l e v a n t a r e a , t h a t has

3




1 been conduc ted and e v a l u a t e d i n an o b j e c t i v e manner by P e r s o n s

2 q u a l i f i e d t o do so , u s i n g p r o c e d u r e s g e n e r a l l y a c c e p t e d i n t h e

3 p r o f e s s i o n t o y i e l d a c c u r a t e and r e l i a b l e r e s u l t s ;

4 7 . "Coun t rywide Home Loans" s h a l l mean Coun t rywide Home

5 Loans , I n c . and i t s s u c c e s s o r s and a s s i g n s , by whateve r names t h e y

6 migh t be known, b u t no t i n c l u d i n g any Bank;

7 8. " D e f a u l t - R e l a t e d S e r v i c e " s h a l l mean any s e r v i c e o r d e r e d

8 as a r e s u l t o f a c o n s u m e r ' s payment d e f a u l t on a Loan , f o r t h e

9 purpose o f p r o t e c t i n g t h e n o t e h o l d e r ' s i n t e r e s t i n t h e p r o p e r t y and

10 r i g h t s under t h e s e c u r i t y i n s t r u m e n t , f o r which t h e Loan a c c o u n t i s

1 1 charged a Fee ( e . g . , s e r v i c e s o f a t y p e c u r r e n t l y o r i n t h e f u t u r e

12 p r o v i d e d by BAC F i e l d S e r v i c e s C o r p o r a t i o n , Landsa fe D e f a u l t , I n c . ,

13 and t h e t r u s t e e - s e r v i c e s b u s i n e s s o f ReconTrus t Company, N.A. , such

14 a s p r o p e r t y i n s p e c t i o n s , p r o p e r t y p r e s e r v a t i o n , b r o k e r ' s p r i c e

15 o p i n i o n s , t i t l e s e a r c h e s and r e p o r t s , and f o r e c l o s u r e t r u s t e e

16 s e r v i c e s ) ;

17 9. " D e f e n d a n t s " s h a l l mean BAC Home Loans S e r v i c i n g and

18 Coun t rywide Home Loans , i n d i v i d u a l l y , c o l l e c t i v e l y , o r i n any

19 combina t ion ;

20 1 0 . "Escrow D e f i c i e n c y " s h a l l have t h e meaning s e t f o r t h i n 24

21 C.F.R . § 3500 .17 ;

22 1 1 . "Escrow S h o r t a g e " s h a l l have t h e meaning s e t f o r t h i n 24

23 C.F.R . § 3 5 0 0 . 1 7 ;

24 1 2 . "FTC Act" s h a l l mean t h e F e d e r a l Trade Commission Act , 15

25 U.S.C. § § 41-58 ;

26 13 . " F e e s " s h a l l mean a l l f e e s and c h a rg e s , i n c l u d i n g b u t n o t

27 l i m i t e d t o f e e s f o r l a t e paymen t s , p r o p e r t y i n s p e c t i o n s , p r o p e r t y

28 p r e s e r v a t i o n , b r o k e r ' s p r i c e o p i n i o n s , a p p r a i s a l s , l e g a l s e r v i c e s ,

4




1 c o u r t c o s t s , r e i n s t a t e m e n t , m o d i f i c a t i o n , and any o t h e r f e e s o r

2 c h a r g e s t h a t a consumer i s o r was a s s e s s e d by Defendan t s i n

3 c o n n e c t i o n w i t h t h e S e r v i c i n g o f any Loan;

4 14 . ~ L o a n "s h a l l mean a r e s i d e n t i a l mor tgage l o a n , i . e . , a

5 l o a n s e c u r e d by a l i e n on r e a l p r o p e r t y t a k e n a s s e c u r i t y f o r t h e

6 r epaymen t o f t h e l o a n ;

7 15 . ~ L o a nI n s t r u m e n t s " s h a l l mean t h e s e c u r i t y i n s t r u m e n t and

8 p r o m i s s o r y n o t e s i g n e d by t h e consumer t o consummate h i s o r h e r

9 L oan ;

10 16 . "Monthly Payment" s h a l l mean a month ly o r o t h e r p e r i o d i c

1 1 paym en t a consumer must make u n d e r t h e Loan I n s t r u m e n t s t o r e p a y t h e

12 Loan p r i n c i p a l , p ay i n t e r e s t on t h e p r i n c i p a l , and, i f n e c e s s a r y,

13 fund e sc row a c c o u n t s f o r i n s u r a n c e a n d / o r r e a l e s t a t e t a x e s ;

14 17. " P e r s o n " s h a l l mean any i n d i v i d u a l , g r o u p , u n i n c o r p o r a t e d

15 a s s o c i a t i o n , l i m i t e d o r g e n e r a l p a r t n e r s h i p , c o r p o r a t i o n , t r u s t , o r

16 o t h e r b u s i n e s s e n t i t y ; and

17 18 . " S e r v i c i n g " s h a l l mean r e c e i v i n g any payments from (o r

18 f o r ) a consumer p u r s u a n t t o t h e t e r m s o f any Loan, i n c l u d i n g amounts

19 f o r escrow a c c o u n t s , and a p p l y i n g t h e payments o f p r i n c i p a l and

20 i n t e r e s t and such o t h e r payments w i t h r e s p e c t t o t h e amoun t s

21 r e c e i v e d from (o r f o r ) t h e consumer a s ma y be r e q u i r e d p u r s u a n t t o

22 t h e t e r m s o f t h e Loan. " S e r v i c i n g " s h a l l a l s o i n c l u d e any r e l a t e d

23 Loan s e r v i c i n g a c t i v i t y such a s t h e a d m i n i s t r a t i o n o f Loan a c c o u n t s ,

24 s e n d i n g p e r i o d i c b i l l i n g s t a t e m e n t s t o a consumer, m a i n t a i n i n g

25 r e c o r d s o f t h e s t a t u s o f t h e c o n s u m e r ' s Loan a c c o u n t s , p r o v i d i n g

26 i n f o r m a t i o n t o and r e s o l v i n g d i s p u t e s w i t h t h e consumers r e g a r d i n g

27 Loan a c c o u n t s , t h e c o l l e c t i o n o f Loan paymen t s , t h e f o r e c l o s u r e o f

28 r e a l p r o p e r t y, t h e u se o f consumer r e p o r t s and t h e f u r n i s h i n g o f

5




1 i n f o r m a t i o n t o consumer r e p o r t i n g a g e n c i e s , and t h e c o l l e c t i o n o r

2 i m p o s i t i o n o f Fees i n r e l a t i o n t o any o f t h e f o r e g o i n g .

3 INJUNCTIVE RELIEF

4 P r o h i b i t e d B u s i n e s s P r a c t i c e s

5 I .

6 IT IS THEREFORE ORDERED t h a t D e f e n d a n t s , t h e i r o f f i c e r s ,

7 employees , a g e n t s , r e p r e s e n t a t i v e s , and a l l o t h e r Persons o r

8 e n t i t i e s i n a c t i v e c o n c e r t o r p a r t i c i p a t i o n wi th them who r e c e i v e

9 a c t u a l n o t i c e o f t h i s O r d e r by p e r s o n a l s e r v i c e o r o t h e r w i s e ,

10 d i r e c t l y o r t h r o u g h any c o r p o r a t i o n , s u b s i d i a r y , d i v i s i o n , o r o t h e r

11 d e v i c e , a r e hereby p e r m a n e n t l y r e s t r a i n e d and e n j o i n e d , i n

12 c o n n e c t i o n w i t h t h e S e r v i c i n g o f any Loan i n d e f a u l t o r C h a p t e r 13

13 B a n k r u p t c y, f rom:

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

A.

B.

c.

D.

M i s r e p r e s e n t i n g , e x p r e s s l y o r by i m p l i c a t i o n , t h e s t a t u s

o f t h e Loan o r amounts owed on t h e Loan, i n c l u d i n g b u t n o t

l i m i t e d t o t h e amount o f any Monthly Payment , Fee c l a i m e d

o r a s s e s s e d , Escrow S h o r t a g e , o r Escrow D e f i c i e n c y ;

M i s r e p r e s e n t i n g , e x p r e s s l y o r by i m p l i c a t i o n , t h a t any

payment o r Fee i s a l lowed u n d e r t h e Loan I n s t r u m e n t s o r

p e r m i t t e d by l aw;

M i s r e p r e s e n t i n g , e x p r e s s l y o r by i m p l i c a t i o n , t h e amount ,

n a t u r e , o r t e rms o f any Fee o r o t h e r c o n d i t i o n o r

r e q u i r e m e n t o f any Loan; and

Making any r e p r e s e n t a t i o n , e x p r e s s l y o r by i m p l i c a t i o n ,

a b o u t t h e s t a t u s o f t h e Loan, amounts owed on t h e Loan

( i n c l u d i n g b u t n o t l i m i t e d t o t h e amount o f any Month ly

Payment , Fee c l a i m e d o r a s s e s s e d , Escrow S h o r t a g e , o r

Escrow D e f i c i e n c y ) , t h e d a t e t h a t any payment o r Fee i s

6




1

2

3

4

5

6

due, o r any o t h e r i n f o r m a t i o n r e g a r d i n g t h e t e rms o r

c o n d i t i o n s o f a Loan, u n l e s s , a t th e t ime o f making such

r e p r e s e n t a t i o n , such Persons p o s s e s s and r e l y on Competen t

and R e l i a b l e Evidence t h a t s u b s t a n t i a t e s t h a t t h e

r e p r e s e n t a t i o n i s t r u e .

I I .

7 IT IS FURTHER ORDERED t h a t D e f e n d a n t s , t h e i r o f f i c e r s ,




11 d i r e c t l y o r t h rough any c o r p o r a t i o n , s u b s i d i a r y, d i v i s i o n , o r o t h e r

12 d e v i c e , a r e hereby p e r m a n e n t l y r e s t r a i n e d and e n j o i n e d , i n

13 c o n n e c t i o n w i t h t h e S e r v i c i n g o f any Loan, from a s s e s s i n g a n d / o r

14 c o l l e c t i n g any Fee f o r a s e r v i c e u n l e s s i t i s f o r s e r v i c e s a c t u a l l y

15 r e n d e r e d and i s (a) a u t h o r i z e d and C l e a r l y and Prominen t ly d i s c l o s e d

16 by th e Loan I n s t r u m e n t s , and n o t p r o h i b i t e d by law; (b) e x p r e s s l y

17 p e r m i t t e d by law and n o t p r o h i b i t e d by t h e Loan I n s t r u m e n t s ; o r

18 (c) a r e a s o n a b l e Fee f o r a s p e c i f i c s e r v i c e r e q u e s t e d by a consumer

19 t h a t i s a s s e s s e d a n d / o r c o l l e c t e d o n l y a f t e r C l e a r and Prominen t

20 d i s c l o s u r e o f t h e Fee i s p r o v i d e d t o t h e consumer and e x p l i c i t

21 c o n s e n t i s o b t a i n e d from t h e consumer t o pay t h e Fee i n exchange fo r

22 t h e s e r v i c e , and such Fee i s n o t o t h e r w i s e p r o h i b i t e d by law o r th e

23 Loan I n s t r u m e n t s .

24 I I I .

25 IT IS FURTHER ORDERED t h a t Defendan t s , t h e i r o f f i c e r s ,


27 e n t i t i e s i n a c t i v e c o n c e r t o r p a r t i c i p a t i o n w i t h them who r e c e i v e


7





2 d e v i c e , a r e h e r e b y p e r m a n e n t l y r e s t r a i n e d and e n j o i n e d , i n


4 c o l l e c t i n g any Fee f o r a D e f a u l t - R e l a t e d S e r v i c e u n l e s s i t i s a

5 r e a s o n a b l e Fee charged by a t h i r d - p a r t y s e r v i c e p r o v i d e r , i n c l u d i n g

6 an A f f i l i a t e o f Defendan t s , f o r a D e f a u l t - R e l a t e d S e r v i c e t h a t i s

7 a c t u a l l y p e r f o r m e d .

8 IV.

9 IT IS FURTHER ORDERED t h a t D e f e n d a n t s , t h e i r o f f i c e r s ,




13 d i r e c t l y o r t h r o u g h any c o r p o r a t i o n , s u b s i d i a r y, d i v i s i o n , o r o t h e r

14 d e v i c e , a r e hereby pe rmanen t ly r e s t r a i n e d and e n j o i n e d , i n


16 c o l l e c t i n g any Fee f o r a D e f a u l t - R e l a t e d S e r v i c e p e r f o r m e d by an

17 A f f i l i a t e o f any Defendan t , u n l e s s t h e Fee compl i e s w i t h S e c t i o n s I I

18 and I I I o f t h i s Order and t h e amount o f t h e Fee does n o t exceed t h e

19 l e s s e r o f (1 ) any Fee l i m i t a t i o n o r a l l o w a b l e amount f o r th e s e r v i c e

20 under a p p l i c a b l e s t a t e l aw, (2 ) any p u b l i s h e d , p r e - e s t a b l i s h e d Fee

21 l i m i t a t i o n o r a l l o w a b l e amount f o r t h e s e r v i c e u n d e r t h e g u i d e l i n e s

22 f o r th e a p p l i c a b l e government - sponsored e n t e r p r i s e i n v e s t i n g i n t h e

23 Loan o r t h e gove rnmen t agency i n s u r i n g t h e Loan ( f o r a l l o t h e r

24 Loans , F e d e r a l N a t i o n a l Mortgage A s s o c i a t i o n ( "Fann ie Mae U)

25 g u i d e l i n e s s h a l l a p p l y ) , and (3 ) t h e marke t r a t e f o r t h e s e r v i c e .

26 To d e t e r m i n e t h e marke t r a t e , Defendan t s s h a l l o b t a i n annua l marke t

27 r e v i e w s o f t h e i r A f f i l i a t e s ' p r i c i n g f o r D e f a u l t - R e l a t e d S e r v i c e s ;

28 such marke t r e v i e w s s h a l l be per fo rmed by a q u a l i f i e d , o b j e c t i v e ,

8




1 i n d e p e n d e n t t h i r d - p a r t y p r o f e s s i o n a l , u s i n g p r o c e d u r e s and s t a n d a r d s

2 g e n e r a l l y a c c e p t e d i n t h e i n d u s t r y t o y i e l d a c c u r a t e and r e l i a b l e

3 r e s u l t s .

4 v.

5 IT IS FURTHER ORDERED t h a t , w i t h i n one-hundred f i f t y (150) days

6 from t h e d a t e o f e n t r y o f t h i s Order, Defendan t s , t h e i r o f f i c e r s ,





11 d e v i c e , a r e h e r e b y p e r m a n e n t l y r e s t r a i n e d and e n j o i n e d , i n

12 c o n n e c t i o n w i t h t h e S e r v i c i n g o f any Loan, from f a i l i n g t o d i s c l o s e

13 C l e a r l y and P r o m i n e n t l y t h e f o l l o w i n g i n f o r m a t i o n :

14 A. At Loan o r i g i n a t i o n o r upon a c q u i r i n g t h e S e r v i c i n g r i g h t s

15 t o t h e c o n s u m e r ' s Loan, D e f e n d a n t s s h a l l d i s c l o s e any u se

16 o f A f f i l i a t e s f o r D e f a u l t - R e l a t e d S e r v i c e s and i f Fees a r e

17

18

19

20

21

22

23

24

25

26

27

28

B.

a s s e s s e d f o r t h o s e s e r v i c e s ;

I f t h e c o n s u m e r ' s Loan goes i n t o d e f a u l t and p r i o r t o

a s s e s s i n g any Fees f o r D e f a u l t -R e l a t e d S e r v i c e s ,

D e f e n d a n t s ' n o t i c e o f d e f a u l t s h a l l d i s c l o s e (1 ) any use

o f A f f i l i a t e s f o r D e f a u l t - R e l a t e d S e r v i c e s ; (2 ) i f Fees

a r e a s s e s s e d f o r t h o s e s e r v i c e s ; and (3) a l i n k t o a

s c h e d u l e o f Fees f o r t h o s e s e r v i c e s ("Fee S c h e d u l e " ) on

D e f e n d a n t s ' w e b s i t e ( s ) . This Fee Schedu le s h a l l i n c l u d e a

d e s c r i p t i o n o f t h e Fees t h a t ma y be c h a rg e d , t h e amount

o r , where a p p l i c a b l e , t h e r a n g e o f each Fee, and , i f t h e

Fee w i l l o r may be p a i d t o an A f f i l i a t e , a d i s c l o s u r e o f

9




1

2

3 C.

t h a t f a c t and t h e names o f t h e a f f i l i a t e d s e r v i c e

p r o v i d e r s ; and

Th e Fee Schedu le s h a l l be p o s t e d and a v a i l a b l e on t h e

4 D e f e n d a n t s ' w e b s i t e { s ) and a copy o f t h e Fee Schedu le

5 s h a l l be m a i l e d o r d e l i v e r e d t o t h e consumer upon r e q u e s t ,

6 a t no c o s t t o t h e consumer.

7 VI.

8 IT IS FURTHER ORDERED t h a t , f o r e i g h t (8 ) y e a r s a f t e r t h e d a t e

9 o f e n t r y o f t h i s O r d e r, D e f e n d a n t s , t h e i r o f f i c e r s , employees ,

10 a g e n t s , r e p r e s e n t a t i v e s , and a l l o t h e r Persons o r e n t i t i e s i n a c t i v e

11 c o n c e r t o r p a r t i c i p a t i o n w i t h them who r e c e i v e a c t u a l n o t i c e o f t h i s

12 O r d e r by p e r s o n a l s e r v i c e o r o t h e r w i s e , d i r e c t l y o r t h rough any

13 c o r p o r a t i o n , s u b s i d i a r y , d i v i s i o n , o r o t h e r d e v i c e , a r e hereby

14 p e r m a n e n t l y r e s t r a i n e d and e n j o i n e d , i n c o n n e c t i o n w i t h t h e

15 S e r v i c i n g o f any Loan, from ( l ) i n i t i a t i n g a f o r e c l o s u r e a c t i o n , o r

16 a s s e s s i n g Fees i n c o n n e c t i o n w i t h an a c t u a l o r t h r e a t e n e d

17 f o r e c l o s u r e a c t i o n , u n t i l t h e Defendan t s have reviewed Competent and

18 R e l i a b l e Evidence t h a t s u b s t a n t i a t e s t h a t t h e consumer i s i n d e f a u l t

19 u n d e r t h e t e rms o f t h e Loan I n s t r u m e n t s ; and (2 ) consummating a

20 f o r e c l o s u r e s a l e u n t i l Defendan t s have i n v e s t i g a t e d any

21 n o n - f r i v o l o u s d i s p u t e s by t h e consumer and i n fo rmed t h e consumer of

22 t h e r e s u l t s o f t h e i n v e s t i g a t i o n .

23 Bankruptcy S e r v i c i n g Requirements

24 VII .

25 IT IS FURTHER ORDERED t h a t , w i t h i n t h i r t y (30) days o f t h e d a t e

26 o f e n t r y o f t h i s O r d e r, D e f e n d a n t s , t h e i r o f f i c e r s , employees ,

27 a g e n t s , r e p r e s e n t a t i v e s , and a l l o t h e r Persons o r e n t i t i e s i n a c t i v e

28 c o n c e r t o r p a r t i c i p a t i o n w i t h them who r e c e i v e a c t u a l n o t i c e o f t h i s

10




1

2

3

4

5

6

7

8

9

10

1 1

12

13

C.

D.

E.

F.

i f t h e r e a r e c h a n g e s i n t h e p o s t - p e t i t i o n Monthly Payment

amount , t h e r e a s o n f o r and amount o f t h e change ;

a comple te i t e m i z a t i o n o f each and e v e r y Fee a s s e s s e d

d u r i n g t h e p r i o r month , i n c l u d i n g t h e amount o f each Fee,

a d e s c r i p t i o n o f each Fee, and t h e d a t e t h a t each Fee wa s

a s s e s s e d ;

a comple te i t e m i z a t i o n o f a l l payments r e c e i v e d d u r i n g t h e

p r i o r month , a t o t a l o f any amounts h e l d i n s u s p e n s e o r

o t h e r w i s e n o t a p p l i e d t o t h e Loan a c c o u n t , and an

i t e m i z a t i o n and d e s c r i p t i o n o f any Fee amounts t h a t remain

o u t s t a n d i n g on t h e Loan a c c o u n t ; and

t h e t o l l - f r e e t e l e p h o n e number and a d d r e s s f o r t h e

consumer and t h e t r u s t e e t o use t o c o n t a c t t h e Defendan t s

14 wi th Loan a c c o u n t q u e s t i o n s .

15 P r o v i d e d , boweve r, t h a t n o t h i n g i n t h i s S e c t i o n s h a l l r e q u i r e

16 Defendan t s t o do a n y t h i n g p r o h i b i t e d by t h e Uni ted S t a t e s Bankrup tcy

17 Code, t h e F e d e r a l Rules o f Bankrup tcy P r o c e d u r e , o r any l o c a l r u l e

18 o r c o u r t o r d e r i n a C h a p t e r 13 Bankrup tcy.

19 IX.

20 IT IS FURTHER ORDERED t h a t Defendan t s , t h e i r o f f i c e r s ,




24 d i r e c t l y o r t h rough any c o r p o r a t i o n , s u b s i d i a r y , d i v i s i o n , o r o t h e r

25 d e v i c e , a r e hereby permanen t ly r e s t r a i n e d and e n j o i n e d , i n

26 c o n n e c t i o n wi th t h e S e r v i c i n g o f any Loan f o r a consumer i n Chap te r

27 13 B a n k r u p t c y, from f a i l i n g t o p r o v i d e t h e consumer and t h e Chap te r

28 13 t r u s t e e w i t h an i n f o r m a t i o n a l n o t i c e on an a n n u a l b a s i s , i n

12




1 w r i t i n g and a t no c o s t t o t h e consumer o r t h e t r u s t e e , t h a t

2 d i s c l o s e s , C l e a r l y and P r o m i n e n t l y, t h e amount and n a t u r e o f any

3 a c c r u e d Escrow Shor tage a n d / o r Escrow D e f i c i e n c y. Such n o t i c e s h a l l

4 be i n a form c o n s i s t e n t w i t h t h e r e q u i r e m e n t s o f 24 C.F.R . § 3500.17

5 and may be p r o v i d e d a l o n g w i t h t h e month ly i n f o r m a t i o n a l n o t i c e

6 r e q u i r e d under S e c t i o n V I I I o f t h i s O r d e r. P r o v i d e d , howeve r, t h a t

7 n o t h i n g i n t h i s S e c t i o n s h a l l r e q u i r e Defendan t s t o do a n y t h i n g

8 p r o h i b i t e d by t h e Uni ted S t a t e s Bankrup tcy Code, t h e F e d e r a l Rules

9 o f Bankrup tcy P r o c e d u r e , o r any l o c a l r u l e o r c o u r t o r d e r i n a

1 0 C h a p t e r 13 Bankrup tcy.

1 1 x .

1 2 IT IS FURTHER ORDERED t h a t Defendan t s , t h e i r o f f i c e r s ,

1 3 employees , a g e n t s , r e p r e s e n t a t i v e s , and a l l o t h e r Persons o r

1 4 e n t i t i e s i n a c t i v e c o n c e r t o r p a r t i c i p a t i o n with them who r e c e i v e

1 5 a c t u a l n o t i c e o f t h i s Order by p e r s o n a l s e r v i c e o r o t h e r w i s e ,

1 6 d i r e c t l y o r t h rough any c o r p o r a t i o n , s u b s i d i a r y, d i v i s i o n , o r o t h e r

1 7 d e v i c e , a r e hereby p e r m a n e n t l y r e s t r a i n e d and e n j o i n e d , i n

1 8 c o n n e c t i o n w i t h t h e S e r v i c i n g o f any Loan t h a t i n c u r r e d any Fee ,

1 9 Escrow S h o r t a g e , a n d / o r Escrow D e f i c i e n c y d u r i n g a C h a p t e r 13

20 Bankrup tcy, from c o l l e c t i n g any such Fee, Escrow S h o r t a g e , a n d / o r

2 1 Escrow D e f i c i e n c y a f t e r Defendan t s o b t a i n r e l i e f from t h e bankrup tcy

22 s t a y o r , i f r e l i e f from s t a y i s no t s o u g h t o r g r a n t e d , a f t e r t h e

23 d e b t o r i s d i s c h a rg e d o r t h e b a n k r u p t c y c a s e i s d i s m i s s e d , u n l e s s

24 Defendan t s (1) o b t a i n e d s p e c i f i c c o u r t a p p r o v a l f o r th e c h a rg e s

25 d u r i n g t h e C h a p t e r 13 Bankrup tcy c a s e , o r (2) p r o v i d e d t o t h e

26 consumer t h e n o t i c e s r e q u i r e d u n d e r S e c t i o n s V I I I and IX o f t h i s

27 Order.

28

13




1 D a t a I n t e g r i t y Requi rements

2 XI.

3 IT IS FURTHER ORDERED t h a t D e f e n d a n t s , in c o n n e c t i o n w i t h t h e

4 S e r v i c i n g o f any Loan i n C h a p t e r 13 Bankrup tcy, s h a l l , no l a t e r t han

5 n i n e t y (90) days a f t e r t h e d a t e o f e n t r y o f t h i s O r d e r, e s t a b l i s h

6 and imp lemen t , and t h e r e a f t e r m a i n t a i n , a comprehens ive d a t a

7 i n t e g r i t y program t h a t i s r e a s o n a b l y d e s i g n e d t o e n s u r e t h e accuracy

8 and c o m p l e t e n e s s o f d a t a and o t h e r i n f o r m a t i o n r e g a r d i n g such Loans

9 p r i o r t o and w h i l e S e r v i c i n g them ( " d a t a i n t e g r i t y program U) . Such

10 d a t a i n t e g r i t y program, t h e c o n t e n t and implemen ta t ion o f which must

1 1 be f u l l y documented i n w r i t i n g , s h a l l be a p p r o p r i a t e t o t h e n a t u r e ,

12 s i z e , c o m p l e x i t y, and scope o f D e f e n d a n t s ' a c t i v i t i e s , and s h a l l

13 i n c l u d e :

14

15

16

17

18

19

A.

B.

C.

t h e d e s i g n a t i o n o f an employee o r employees t o be

a c c o u n t a b l e f o r t h e d a t a i n t e g r i t y program;

t h e r e g u l a r t e s t i n g o r m o n i t o r i n g of t h e e f f e c t i v e n e s s of

t h e d a t a i n t e g r i t y program; and

t h e e v a l u a t i o n and a d j u s t m e n t o f th e d a t a i n t e g r i t y

program i n l i g h t o f t h e r e s u l t s o f th e t e s t i n g and

20 m o n i t o r i n g r e q u i r e d by S u b s e c t i o n B, any m a t e r i a l changes

21 t o D e f e n d a n t s ' o p e r a t i o n s o r b u s i n e s s a r r a n g e m e n t s , o r any

22 o t h e r c i r c u m s t a n c e s t h a t Defendan t s know o r have r eason t o

23 know may have a m a t e r i a l impac t on th e e f f e c t i v e n e s s o f

24 t h e d a t a i n t e g r i t y program.

25 XII .

26 IT IS FURTHER ORDERED t h a t Defendan t s o b t a i n an a s s e s s m e n t and

27 r e p o r t (an "Assessmen t U) from a q u a l i f i e d , o b j e c t i v e , i n d e p e n d e n t

28 t h i r d - p a r t y p r o f e s s i o n a l , u s i n g p r o c e d u r e s and s t a n d a r d s g e n e r a l l y

14




1 a c c e p t e d i n t h e p r o f e s s i o n , w i t h i n tw o hundred seven ty (270) days

2 a f t e r t h e d a t e o f e n t r y o f t h e Order, and b i e n n i a l l y t h e r e a f t e r f o r

3 e i g h t (8 ) y e a r s a f t e r e n t r y o f t h e Order, t h a t :

4 A. s e t s f o r t h t h e s p e c i f i c d a t a i n t e g r i t y program t h a t

5 D e f e n d a n t s have implemented and ma in t a ine d d u r i n g t h e

6

7

8

9

10

11

B.

c.

r e p o r t i n g p e r i o d ;

e x p l a i n s how such d a t a i n t e g r i t y program i s a p p r o p r i a t e t o

Defendan t s ' s i z e and c o m p l ex i t y, and t h e n a t u r e and scope

o f De fendan t s ' a c t i v i t i e s ; and

e x p l a i n s how t h e d a t a i n t e g r i t y program m e e t s o r exceeds

t h e p r o t e c t i o n s r e q u i r e d by S e c t i o n XI o f t h i s Order.

12 Defendants s h a l l p r o v i d e a copy o f t h e f i r s t Assessment t o t h e

13 Commiss ion w i t h i n t e n (10) days a f t e r t h e Assessment i s d e l i v e r e d t o

14 D e f e n d a n t s . Defendan ts s h a l l p r o v i d e a copy o f a l l : p l a n s , r e p o r t s ,

15 s t u d i e s , r ev i ews , a u d i t s , a u d i t t r a i l s , p o l i c i e s , t r a i n i n g

16 m a t e r i a l s , and a s s e s s m e n t s , w h e t h e r p r e p a r e d by o r on b e h a l f o f

17 D e f e n d a n t s , r e l i e d upon t o p r e p a r e such Assessment , t o t h e

18 Commiss ion w i t h i n t h i r t y (30) days o f r e q u e s t . A l l s u b s e q u e n t

19 b i e n n i a l Assessments s h a l l be r e t a i n e d by Defendan ts and a copy

20 prov ided t o t h e Commiss ion w i t h i n t h i r t y (30) days o f r e q u e s t .

21 Monetary R e l i e f

22 X I I I .

23 IT IS FURTHER ORDERED t h a t :

24 A. D e f e n d a n t s , w i t h o u t a d m i t t i n g any v i o l a t i o n o f law, s h a l l

25 pay t h e amount o f one hundred e i g h t m i l l i o n d o l l a r s

26 ($108 ,000 ,000 .00) t o remedy t h e v i o l a t i o n s o f law a l l e g e d

27 by t h e FTC. On o r b e f o r e f i v e (5 ) b u s i n e s s days a f t e r t h e

28 d a t e o f e n t r y o f t h i s Order, Defendan ts s h a l l wire

15




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

B.

t r a n s f e r t h e sum o f one hundred e i g h t m i l l i o n d o l l a r s

($108 ,000 ,000 .00) t o t h e Commission o r such agen t as t h e

Commission may d i r e c t , p u r s u a n t t o i n s t r u c t i o n s p rov ide d

by t h e Commiss ion. A l l funds p a i d pur suan t t o t h i s Order

s h a l l be d e p o s i t e d i n t o a fund admin i s t e r ed by t h e

Commission o r i t s agen t t o be used f o r e q u i t a b l e r e l i e f

f o r consumers whose Loans were s e r v i c e d by Defendants

p r i o r t o t h e i r a c q u i s i t i o n by Bank o f Amer ica , i n c l u d i n g

b u t n o t l i m i t e d t o consumer r e d r e s s and any a t t e n d a n t

e x p e n s e s f o r t h e a d m i n i s t r a t i o n o f t h e r e d r e s s program.

In t h e even t t h a t d i r e c t r e d r e s s t o consumers i s wholly o r

p a r t i a l l y i m p r a c t i c a b l e o r funds remain a f t e r r e d r e s s i s

comple ted , t h e Commission may a p p ly any remain ing funds

f o r such o t h e r e q u i t a b l e r e l i e f ( i nc lud ing consumer

i n f o r m a t i o n remedies ) a s i t de t e rmines t o be r ea sonab ly

r e l a t e d t o t h e De fe n d an t s ' p r a c t i c e s a l l e g e d i n t h e

Compla in t . Any funds n o t used f o r such e q u i t a b l e r e l i e f

s h a l l be d e p o s i t e d as e q u i t a b l e disgorgement i n t o t h e

Uni ted S t a t e s Treasu ry. Defendants s h a l l have no r i g h t t o

c h a l l e n g e th e FTC's cho ice o f remedies under t h i s S e c t i o n .

In t h e even t t h a t Defendants d e f a u l t on any o b l i g a t i o n t o

make any payment s e t f o r t h i n t h i s Order, which d e f a u l t

c o n t i n u e s f o r t e n (10) days beyond t h e due d a t e o f t h e

payment , t h e e n t i r e unpa id amount t o g e t h e r with i n t e r e s t ,

computed p u r s u a n t t o 28 U.S .C . § 1961(a) from t h e d a t e o f

d e f a u l t t o t h e d a t e o f payment , s h a l l i m m e d i a t e l y become

due and payab le . N o tw i th s t and ing any o t h e r p r o v i s i o n o f

t h i s O r d e r, Defendan ts agree t h a t i f t hey f a i l t o meet any

16




1

2

3

4

5

6

7

8

9

10

C.

D.

payment o b l i g a t i o n s s e t f o r t h i n t h i s Order, Defendan t s

s h a l l pay t h e c o s t s and a t t o r n e y s ' f e e s i n c u r r e d by t h e

Commission o r i t s a g e n t s i n any a t t e m p t s t o c o l l e c t

amounts due p u r s u a n t t o t h i s O r d e r.

Defendan t s r e l i n q u i s h a l l domin ion , c o n t r o l , and t i t l e t o

th e funds p a i d t o t h e f u l l e s t e x t e n t p e r m i t t e d by law.

Defendan t s s h a l l make no c l a i m t o o r demand f o r r e t u r n of

th e funds , d i r e c t l y o r i n d i r e c t l y , t h rough c o u n s e l o r

o t h e r w i s e .

Defendan t s a g r e e t h a t t h e f a c t s a s a l l e g e d i n t h e

11 Compla in t f i l e d i n t h i s a c t i o n s h a l l be t a k e n a s t r u e

12 w i t h o u t f u r t h e r p r o o f i n any b a n k r u p t c y case o f e i t h e r o f

13 th e Defendan t s o r subsequen t c i v i l l i t i g a t i o n pursued by

14 th e Commission t o e n f o r c e i t s r i g h t s t o any payment o r

15 money judgment p u r s u a n t t o t h i s Order. For t h e purpose o f

16 any s u b s e q u e n t p r o c e e d i n g t o e n f o r c e payments r e q u i r e d by

17 t h i s S e c t i o n o f t h i s O r d e r, i n c l u d i n g any a c t i o n f i l e d i n

18 a b a n k r u p t c y case o f e i t h e r o f t h e Defendan t s , t h e

19 Defendan t s waive any r i g h t t o c o n t e s t t h e a l l e g a t i o n s i n

20 t h e Commiss ion ' s Compla in t .

21 D a t a

22 XIV.

23 IT IS FURTHER ORDERED t h a t , s u b j e c t t o th e FTC's c e r t i f i c a t i o n

24 o f compl i ance w i t h t h e R i g h t t o F i n a n c i a l Pr ivacy Act , t o f a c i l i t a t e

25 r e d r e s s under S e c t i o n X I I I above, t h e Defendan t s s h a l l p r o v i d e th e

26 Commission a n d / o r i t s d e s i g n a t e d a g e n t , w i t h i n t h i r t y (30) c a l e n d a r

27 days a f t e r r e c e i v i n g a w r i t t e n r e q u e s t by t h e Commission o r i t s

28 d e s i g n a t e d a g e n t , w i t h a l l i n f o r m a t i o n r e a s o n a b l y r e q u i r e d t o

17




1 i n d e p e n d e n t c o n t r a c t o r , r e p r e s e n t a t i v e , a g e n t , o r employee

2 who h as a g r e e d t o such an i n t e r v i e w, r e l a t i n g i n any way

3 t o any conduc t s u b j e c t t o t h i s Order. The Person

4 i n t e r v i e w e d may have c o u n s e l p r e s e n t .

5 P r o v i d e d however, t h a t n o t h i n g i n t h i s Order s h a l l l i m i t t h e

6 Commiss ion ' s l a w f u l u se o f compul so ry p r o c e s s , p u r s u a n t t o S e c t i o n s

7 9 and 20 o f t h e FTC Act , 15 U.S .C . § § 49, 5 7 b - l , t o o b t a i n any

8 documen ta ry m a t e r i a l , t a n g i b l e th i n g s , t e s t i m o n y, o r i n f o r m a t i o n

9 r e l e v a n t t o u n f a i r o r d e c e p t i v e a c t s o r p r a c t i c e s i n o r a f f e c t i n g

10 commerce ( w i t h i n t h e meaning o f 15 U.S .C . § 45(a) ( 1 ) ) .

11 Compl iance Repor t ing

12 XVI.

13 IT IS FURTHER ORDERED t h a t , i n o r d e r t h a t compl iance w i t h t h e

14 p r o v i s i o n s o f t h i s O r d e r may be moni to red :

15 A. For a p e r i o d o f f i v e (5) y e a r s from t h e d a t e o f e n t r y o f

16

17

18

19

20

21

22

23

2 4

25

26

27

28

t h i s Order, Defendan t s s h a l l n o t i f y t h e Commission o f any

changes i n s t r u c t u r e o f any Defendan t o r any b u s i n e s s

e n t i t y t h a t any Defendan t d i r e c t l y o r i n d i r e c t l y c o n t r o l s ,

o r h as an ownersh ip i n t e r e s t i n , t h a t ma y a f f e c t

compl i ance o b l i g a t i o n s a r i s i n g under t h i s Order, i n c l u d i n g

b u t n o t l i m i t e d t o : i n c o r p o r a t i o n o r o t h e r o r g a n i z a t i o n ; a

d i s s o l u t i o n , a s s i g n m e n t , s a l e , merge r, o r o t h e r a c t i o n ;

t h e c r e a t i o n o r d i s s o l u t i o n o f a s u b s i d i a r y, p a r e n t , o r

A f f i l i a t e t h a t e n g a g e s i n any a c t s o r p r a c t i c e s s u b j e c t t o

t h i s Order, o r a change i n t h e b u s i n e s s name o r a d d r e s s ,

a t l e a s t t h i r t y (30) d a y s p r i o r t o such change , p r o v i d e d

t h a t , w i t h r e s p e c t t o any such change i n t h e b u s i n e s s

e n t i t y a b o u t which a Defendan t l e a r n s l e s s t h a n t h i r t y

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P r o v i d e d t h a t , i n l i e u o f o v e r n i g h t c o u r i e r , Defendan t s

may send such r e p o r t s o r n o t i f i c a t i o n s by f i r s t - c l a s s

m a i l , b u t o n l y i f Defendan t s con temporaneous ly send an

e l e c t r o n i c v e r s i o n o f such r e p o r t o r n o t i f i c a t i o n t o t h e

Commiss ion a t : DEBr ie f@f tc .gov.

E. For p u r p o s e s o f t h e compl i ance r e p o r t i n g and m o n i t o r i n g

r e q u i r e d by t h i s O r d e r, t h e Commission i s a u t h o r i z e d t o

communica te d i r e c t l y w i t h each Defendan t .

Recordkeepinq

XVII.

IT IS FURTHER ORDERED t h a t , f o r a p e r i o d o f e i g h t (8) y e a r s

t h e d a t e o f e n t r y o f t h i s Order, D e f e n d a n t s a r e h e r e b y

13 r e s t r a i n e d and e n j o i n e d , i n c o n n e c t i o n w i t h t h e S e r v i c i n g o f any

14 Loan, from f a i l i n g t o c r e a t e and r e t a i n , f o r a p e r i o d o f t h r e e (3 )

15 y e a r s a f t e r t h e d a t e o f p r e p a r a t i o n o f t h e r e c o r d , t h e f o l l o w i n g

16 r e c o r d s :

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A.

B.

Accoun t ing r e c o r d s t h a t r e f l e c t t h e c o s t o f Loans a c q u i r e d

a n d / o r s o l d ; r evenues g e n e r a t e d from S e r v i c i n g Fees a n d / o r

Fees p a i d by a n d / o r imposed on consumers ; and t h e

d i s b u r s e m e n t o f such r e v e n u e s ;

P e r s o n n e l r e c o r d s a c c u r a t e l y r e f l e c t i n g : t h e name,

a d d r e s s , and t e l e p h o n e number o f each Pe r son employed i n

any c a p a c i t y by such b u s i n e s s , i n c l u d i n g as an i ndependen t

c o n t r a c t o r ; t h a t P e r s o n ' s jo b t i t l e o r p o s i t i o n ; t h e d a t e

upon which t h e Person commenced work; and t h e d a t e and

r e a s o n f o r t h e P e r s o n ' s t e r m i n a t i o n , i f a p p l i c a b l e ;

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C.

D.

E.

F.

Consumer f i l e s c o n t a i n i n g t h e names, a d d r e s s e s , phone

numbers , d o l l a r amounts p a i d , and d e s c r i p t i o n o f Fees o r

o t h e r c h a rg e s imposed;

Wr i t t e n c o m p l a i n t s o r d i s p u t e s and Q u a l i f i e d Wr i t t e n

Reques t s , a s d e f i n e d i n 12 U.S.C. § 2605(e) (1) (B), from

consumers (whether r e c e i v e d d i r e c t l y , i n d i r e c t l y o r

t h rough any t h i r d p a r t y ) and r e s p o n s e s t o t h o s e

c o m p l a i n t s , d i s p u t e s , o r r e q u e s t s ;

Copies o f a l l t r a i n i n g m a t e r i a l s and p o l i c y manua l s ; and

A ll r e c o r d s and documents n e c e s s a r y t o demons t ra te f u l l

11 compl iance w i t h each p r o v i s i o n o f t h i s Order, i n c l u d i n g

12 b u t n o t l i m i t e d t o , c o p i e s o f acknowledgments o f r e c e i p t

13 o f t h i s Order r e q u i r e d by t h e S e c t i o n s t i t l e d

14 ~ D i s t r i b u t i o no f Order" and ~ A c k n o w l e d g m e n to f R e c e i p t o f

15 Order" and a l l r e p o r t s s u b m i t t e d t o t h e FTC p u r s u a n t t o

16 t h e S e c t i o n t i t l e d ~ C o m p l i a n c eR e p o r t i n g . "

17 D i s t r i b u t i o n o f Order

18 XVII I .

19 IT IS FURTHER ORDERED t h a t , f o r a p e r i o d o f f i v e (5 ) years from

20 t h e d a t e o f e n t r y o f t h i s Order, Defendan t s s h a l l d e l i v e r c o p i e s o f

21 t h e Order as d i r e c t e d below:

22 A. Each Defendant s h a l l d e l i v e r a copy o f t h i s Order t o (1 )

23

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a l l o f i t s p r i n c i p a l s , o f f i c e r s , d i r e c t o r s , and managers ;

(2) a l l o f i t s employees , a g e n t s , and r e p r e s e n t a t i v e s who

engage i n conduc t r e l a t e d t o t h e s u b j e c t m a t t e r o f t h i s

Order ; and (3) any b u s i n e s s e n t i t y r e s u l t i n g from any

change i n s t r u c t u r e s e t f o r t h i n S u b s e c t i o n A o f th e

S e c t i o n t i t l e d "Compl iance R e p o r t i n g . " For c u r r e n t

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p e r s o n n e l , d e l i v e r y shou ld be w i t h i n t h i r t y (30) days o f

s e r v i c e o f t h i s Order upon such Defendan t . For new

p e r s o n n e l , d e l i v e r y s h a l l o c c u r p r i o r t o them assuming

t h e i r r e s p o n s i b i l i t i e s . For any b u s i n e s s e n t i t y r e s u l t i n g

from any change i n s t r u c t u r e s e t f o r t h i n S u b s e c t i o n A of

t h e S e c t i o n t i t l e d "Compl iance R e p o r t i n g , " d e l i v e r y s h a l l

be a t l e a s t t e n (10) days p r i o r t o th e change i n

s t r u c t u r e .

Defendan t s must s e c u r e a s i g n e d and d a t e d s t a t e m e n t

acknowledging r e c e i p t o f t h e Order, w i t h i n t h i r t y (30)

11 days o f d e l i v e r y , from a l l Persons r e c e i v i n g a copy o f t h e

12 Order p u r s u a n t t o t h i s S e c t i o n .

13 Acknowledgment o f R e c e i p t o f Order

14 XIX.

15 IT IS FURTHER ORDERED t h a t each Defendant , w i t h i n f i v e (5 )

16 b u s i n e s s days o f r e c e i p t o f t h i s Order as e n t e r e d by t h e Cour t , must

17 submi t t o t h e Commission a t r u t h f u l sworn s t a t e m e n t acknowledg ing

18 r e c e i p t o f t h i s Order.

19 Reten t ion o f J u r i s d i c t i o n

2 0 X X .

21 IT IS FURTHER ORDERED t h a t t h i s Cour t s h a l l r e t a i n j u r i s d i c t i o n

22 o f t h i s m a t t e r f o r purposes o f c o n s t r u c t i o n , m o d i f i c a t i o n , and

23 enforcement o f t h i s O r d e r.

24

25 IT IS SO ORDERED.

2 6 A

27 DATED: (p Jrr f (J- - - - - - ~ - - - - - - - - - - - -

28 STATES DISTRICT JUDGE




1 APPROVED AS TO FORM AND CONTENT:

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4 FEDERAL TRADE COMMISSION

5

6 WILLARD K. TOM

Genera l Counsel7

8

9 LUCY E. ORRISHEATHER ALLEN

10 LYNETTE HOTCHKISS

l m o r r i s @ f t c . g o v j h a l l e n @ f t c . g o v j11 F e d e r a l Trade Commission600 Pennsy lvan ia Avenue

12 Washington, D.C. 20580Te l : (202) 326-3224

13 Fax: (202) 326-3768

14 D. Jaco (Loca l Counse l )J J a bs@f tc .gov

15 C a l i f o r n i a Bar No . 134154F e d e r a l Trade Commission

16 10877 Wi l s h i r e B l v d . , S t e . 700Los Ange les , CA 90024

17 Te l : (310) 824-4343Fax: (310) 824-4380

1 8A t t o r n e y s f o r P l a i n t i f f

19 F e d e r a l Trade Commission

, 201020

DATED: ~ \ A . "«.. + -

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l h o t c h k i s s @ f t c . g o v

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homeowners get about $240 apiece- ftc settlement with countrywide-complaint & consent order here

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