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Mortgage Company Victims Get Their Money Back

The Federal Trade Commission announced yesterday that almost $28 million was returned to about 86,000 consumers as part of a settlement with the Bear Sterns Companies, LLC and EMC Mortgage Corporation.

The September 2008 settlement was in response to charges that the companies engaged in illegal practices in servicing consumer mortgage loans - by misrepresenting the amounts the borrowers owed, using unlawful and abusive payment collection tactics, and charging unauthorized fees such as late fees, property inspection fees, and loan modification fees.

Bear Sterns and EMC played a major role in the secondary mortgage market during the residential real estate boom. They rapidly aqcuired and securitized mortgages, but "neglected to obtain timely and accurate information on consumers’ loans, made inaccurate claims to consumers, and engaged in unlawful collection and servicing practices," as charged by the FTC.

EMC was the loan servicer for many of the mortgages aquired by Bear Sterns and EMC, and as of September 2007 EMC had more than 475,000 mortgage loans in its portfolio with a total unpaid balance of about $80 million.

A large portion of these home loans are sub-prime loans or Alt-A (better than sub-prime but less than prime) loans, and other types of creative financing mortgages such as pay option adjustable rate loans ("pick-a-payment" loans), interest-only mortgages, negative amortization loans, and loans requiring little or no income or asset documentation.

The illegal practices occured prior to the aquisition of Bear Sterns by JP Morgan Chase & Co. on May 30, 2008.

Lydia B. Parnes, Director of the FTC’s Bureau of Consumer Protection said, “Like other companies that send a bill, mortgage servicers must make sure that the amount they say is due really is the amount due. Consumers have the right to expect accuracy from the company that collects their mortgage payments.”

Consumers who have been mailed redress checks paid unauthorized fees to EMC and/or had a home foreclosed upon by EMC. EMC consumers with questions can call the redress administrator at 1-877-225-7510.

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Tuesday, 14 July 2020

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