FTC Distributes Funds From EMC Settlement
Washington-The Federal Trade Commission said it has completed the distribution of $28 million to 68,000 homeowners that were allegedly harmed by EMC Mortgage Corp.'s servicing practices.
In September 2008, EMC and its parent, Bear Stearns & Co., agreed to a $28 million settlement with the consumer protection agency. FHA alleged EMC misrepresented the amounts borrowers owed on their mortgage and charged unauthorized late fees, property inspection fees and loan modification fees.
The FTC also charged the Lewisville, Texas, servicing company engaged in unlawful and abusive collection practices. EMC did not admit to any wrongdoing.
"Consumers who have been mailed redress checks paid unauthorized fees to EMC and/or had a home foreclosed by EMC," FTC said.
The FTC conducted a multiyear investigation of EMC's servicing practices. But the settlement was not secured until after the collapse of Bear Stearns last May and its acquisition by JPMortgage Chase & Co.
As of March 31, 2008, EMC serviced $86.5 billion in mortgage loans.
EMC is one of a number of mortgage servicers that have faced FTC scrutiny over loan servicing practices.
In one of the most celebrated cases, against Fairbanks Capital, the FTC outlined a number of servicing practices involving issues such as the force-placement of hazard insurance and the posting of payments from consumers, that the FTC alleged had created compliance problems. Fairbanks Capital agreed to a $40 million settlement in the case back in 2003.