Order - Federal Trade Commission, Plaintiff, V. Country Wide Home Loans, Inc.

8/9/2019 Order - Federal Trade Commission, Plaintiff, V. Country Wide Home Loans, Inc.

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1 WILLARD K. TOMGenera l Counsel2 LUCY E. MORRIS3 HEATHER ALLENLYNETTE HOTCHKISS4 lmorr is@ftc .gov; hal len(dftc qov,lho tchk iss@ftc .gov5 Federa l Trade Commission

600 Pennsylvania Avenue, N.W.6 Washington, D.C. 20580Tel : (202) 326-32247 Fax: (202) 326-37688 JOHN D. JACOBS (Local Counsel)j jacobs@ftc .gov9 Cal i fo rn ia Bar No. 134154Federal Trade Commission10 10877 Wilsh i re Blvd. , St e . 700

Los Angeles, CA 9002411 Tel : (310) 824-4343Fax: (310) 824-43801213 Attorneys for the P l a i n t i f fFedera l Trade Commission1415 UNITED STATES DISTRICT COURT16 CENTRAL DISTRICT OF CALIFORNIA1718 )19 FEDERAL TRADE COMMISSION, )) Case No.20 P l a i n t i f f , ))21 v. )) CONSENT JUDGMENT AND ORDER22 COUNTRYWIDE HOME LOANS, INC. , )a corpora t ion , and )23 )

BAC HOME LOANS SERVICING, LP, )24 a l imi t ed pa r tne rsh ip , ))25 Defendants . ))262728 IT IS HEREBY ORDERED, ADJUDGED and DECREED, pursuan t to and in

accordance with the St ipu la t ion fo r Entry of Consent Judgment and


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1 Order ente red in to by and between p l a i n t i f f the Federal Trade2 Commission ("FTC" or "Commission") and defendants Countrywide Home3 Loans, Inc . and BAC Home Loans Servic ing LP (p la in t i f f and4 defendants are c o l l e c t i ve l y re fe r red to as " the pa r t i e s " ) , as5 fo l lows:6

7 l.Findings

This Court has j u r i s d i c t i on over Defendants and the8 sub jec t matte r of t h i s ac t ion . Venue in the Cent ra l Dis t r i c t of9 Cal i forn ia i s proper .

10 2. The Complaint s t a t e s a cla im upon which r e l i e f may be11 granted aga ins t Defendants under Sec t ions 5(a) and l3(b) of the FTC12 Act, 15 U.S.C. 45(a) and 53(b) .13 3. The ac t iv i t i e s of Defendants are In or a f fec t ing commerce,14 as "commerce" i s def ined in Sec t ion 4 of the FTC Act, 15 U.S.C.15 44.16 4. Defendants have not admit ted any of the a l l e g a t i o n s of17 wrongdoing s e t for th In the Complaint , and ent ry of t h i s Order i s18 not an admission of any such a l l e g a t i o n s of wrongdoing or vio la t ion19 of law. Nonetheless , Defendants s t i pu l a t e and agree to en t ry of20 t h i s Order in order to s e t t l e and reso lve these d i spu tes . The21 Complaint does not al lege any wrongdoing by Bank of America, N.A.22 5. P l a i n t i f f and Defendants waive a l l r igh t s to seek j ud i c i a l23 review or otherwise con tes t th e va l id i t y of t h i s Order, and24 Defendants waive any r i gh t t ha t may a r i s e under the Equal Access to25 Jus t i ce Act, 28 U.S.C. 2412.26 6. Entry of t h i s Order i s in the pub l i c i n t e r e s t .27 7. The pa r t i e s , by and through t h e i r counsel , have agreed28 t ha t ent ry of t h i s Order reso lves a l l matte r s in dispute between

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1 them ar i s ing from the f ac t s and circumstances a l leged in th e2 Complaint in t h i s ac t ion , up to the date of en t ry of t h i s Order .3 Def in i t ions4 For purposes of t h i s Order , th e fo l lowing def in i t ions sha l l5 apply:6 1. "A f f i l i a t e " s ha l l mean an organiza t ion t ha t owns o r7 con t ro l s , i s owned or con t ro l l ed by, or i s under common ownership or8 con t ro l with , another organiza t ion;9 2 . "BAC Home Loans Servicing" sh a l l mean BAC Home Loans

10 Serv ic ing , LP, formerly doing business as Countrywide Home Loans11 Serv ic ing , LP, and i t s successors and ass igns , by whatever names12 they might be known, but not including any Bank;13 3. "Bank" sh a l l mean a bank t h a t i s exempt from the FTC's14 j u r i s d i c t i on pursuant to Sect ion 5(a) (2) of the FTC Act, 15 U.S.C.15 45(a) (2), including Bank of America, N.A. "Bank" sh a l l not16 include any Person or e n t i t y con t ro l l ed d i r e c t ly or i n d i r e c t l y by a17 bank and t h a t i s not i t s e l f a bank, such as an opera t ing subs id ia ry18 o r A ff i l i a t e of a bank t h a t i s not i t s e l f a bank;19 4. "Chapter 13 Bankruptcy" sha l l mean any bankruptcy case20 f i l ed under Chapter 13 of Ti t l e 11 of the United Sta tes Code, 1121 U.S.C. 1301-1330;22 5. "Clear and Prominent" o r "Clear ly and Prominently" sh a l l23 mean t ha t information i s displayed in a manner t h a t i s r ead i ly24 not iceable , readable , and understandable ;25 6. "Competent and Rel iab le Evidence" sh a l l mean t e s t s ,26 ana lyses , research , s tud ies , or other evidence, including a data27 i n t e g r i t y program t h a t complies wi th Sect ion XI of t h i s Order , based28 on th e exper t ise o f profe s s iona l s i n the re l evan t area , t h a t has

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1 been conducted and eva lua ted in an objec t ive manner by Persons2 qua l i f i ed to do so , using procedures gene ra l ly accep ted in the3 profess ion to y ie ld accura te and r e l i a b l e r e s u l t s ;4 7. "Countrywide Home Loans u sh a l l mean Countrywide Home5 Loans, Inc . and i t s successors and ass igns , by whatever names they6 might be known, b ut not including any Bank;7 8. "Defau l t -Rela ted Serv ice" sh a l l mean any se rvice ordered8 as a r e s u l t of a consumer 's payment defau l t on a Loan, fo r the9 purpose of pro tec t ing the note h o ld e r ' s i n t e r e s t in the p roper ty and

10 r i g h t s under th e secur i ty ins t rument , fo r which the Loan account i s11 charged a Fee ( e .g . , se rv ice s o f a type cur ren t ly or in the fu tu re12 provided by BAC Fie ld Serv ices Corporat ion , Landsafe Defau l t , Inc . ,13 and the t rus t ee -se rv ices bus iness of ReconTrust Company, N.A., such14 as property i n spec t ions , proper ty prese rva t ion , broker ' s p r ice15 opin ions , title searches and repor t s , and fo rec losure t rus t ee16 se rv ices ) ;17 9. "Defendants U sh a l l mean BAC Home Loans Servicing and18 Countrywide Home Loans, i nd iv idua l ly , c o l l e c t i v e l y , or in any19 combinat ion;20 10. "Escrow Defic iencyu sh a l l have the meaning se t fo r th in 2421 C.F.R. 3500.17;22 11. "Escrow Shor tage U sh a l l have the meaning se t fo r th in 2423 C.F.R. 3500.17;24 12. "FTC Act U sh a l l mean the Federal Trade Commission Act , 1525 U.S.C. 41-58;26 13. "Fees U sh a l l mean a l l fees and charges , including but not27 l imi ted to fees fo r l a t e payments, proper ty inspec t ions , proper ty28 preserva t ion , broker ' s p r ice opin ions , appra i sa l s , l eg a l se rv ice s ,

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1 co u r t cos t s , re ins ta tement , modi f i ca t ion , and any other fees o r2 charges t h a t a consumer i s or was assessed by Defendants in3 connect ion with th e Serv ic ing o f any Loan;4 14. "Loan" sh a l l mean a r e s i d e n t i a l mortgage loan , i.e., a5 loan secured by a l i en on r ea l proper ty taken as secur i ty fo r the6 repayment o f th e l oan ;7 15. "Loan Ins t ruments" s h a l l mean th e secur i ty ins t rument and8 promissory note s igned by th e consumer to consummate h is or her9 Loan;

10 16. "Monthly Payment" s h a l l mean a monthly o r o t h e r p e r i o d i c11 payment a consumer must make under th e Loan Ins t ruments to repay th e12 Loan p r in c ip a l , pay i n t e r e s t on th e p r in c ip a l , and, if necessary ,13 fund escrow accounts fo r insurance and /or r ea l e s t a t e t ax es ;14 17. "Person" s h a l l mean any i nd iv idua l , group, unincorpora ted15 assoc ia t ion , l imi t ed or genera l pa r tne rsh ip , co rp o ra t io n , t r u s t , or16 o t h e r bus iness e n t i t y ; and17 18. "Serv ic ing" s h a l l mean rece iv ing any payments from (or18 for) a consumer pursuan t to th e te rms of any Loan, inc lud ing amounts19 fo r escrow account s , and applying th e payments of p r i n c i p a l and20 i n t e r e s t and such o t h e r payments with r e sp ec t t o th e amounts21 rece ived from (or for) the consumer as may be r eq u i red pursuan t to22 th e terms o f th e Loan. "Serv ic ing" s h a l l a l so inc lude any r e la ted23 Loan se rv i c i n g a c t iv i t y such as th e admin i s t ra t ion o f Loan account s ,24 sending pe r iod ic b i l l i n g s ta tements to a consumer, main ta in ing25 records o f th e s t a tu s of the consumer ' s Loan account s , prov id ing26 in fo rmat ion to and reso lv ing d i spu tes with the consumers regard ing27 Loan account s , th e co l l ec t ion o f Loan payments , th e fo rec losure of28 r e a l p ro p er ty , th e use o f consumer repor t s and th e fu rn i sh ing of

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1 in fo rmat ion to consumer repor t ing agencies , and the co l l ec t ion or2 impos i t ion of Fees in re l a t ion to any of the foregoing .3 INJUNCTIVE RELIEF4 Prohibited Business Pract ices5 I .6 IT IS THEREFORE ORDERED t h a t Defendants , t h e i r o f f i c e r s ,7 employees, agen ts , r ep resen ta t ives , and a l l o t h e r Persons or8 e n t i t i e s in ac t ive concer t or par t i c ipa t ion with them who rece ive9 ac tua l not ice of t h i s Order by persona l se rv ice or otherwise ,

10 d i r e c t ly or through any corpora t ion , subs id i a ry , d iv i s ion , or other11 dev ice , are hereby permanently r es t r a ined and en jo ined , in12 connect ion with th e Serv ic ing o f any Loan in defau l t or Chapter 1313 Bankruptcy, from:141516171819202122232425262728

A.

B.

C.

D.

Misrepresen t ing , express ly o r by impl ica t ion , th e s t a tusof the Loan or amounts owed on th e Loan, including bu t notl imi ted to the amount of any Monthly Payment, Fee cla imedor assessed , Escrow Shortage, or Escrow Deficiency;Misrepresen t ing , express ly or by impl ica t ion , t h a t anypayment or Fee i s al lowed under the Loan Ins t ruments orpermi t t ed by law;Misrepresen t ing , express ly or by impl ica t ion , the amount,natu re , or terms of any Fee or othe r cond i t ion o rrequi rement of any Loan; andMaking any rep re sen ta t ion , express ly o r by impl ica t ion ,about th e s t a tus of the Loan, amounts owed on the Loan( including bu t not l imi t ed to th e amount of any MonthlyPayment, Fee claimed or assessed , Escrow Shor tage , orEscrow Defic iency) , the date t h a t any payment or Fee i s

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1 due, or any othe r information regarding the terms or2 cond i t ions o f a Loan, unless , a t the t ime of making such3 r ep resen ta t ion , such Persons possess and r e ly on Competent4 and Rel iab le Evidence t h a t subs tan t ia tes t h a t the5 rep re sen ta t ion i s t rue .6 I I .7 IT IS FURTHER ORDERED t h a t Defendants, t he i r of f i c e r s ,8 employees, agents , r ep resen ta t ives , and a l l other Persons or9 e n t i t i e s in ac t ive concer t or p a r t i c i p a t i o n with them who rece ive

10 ac tua l not ice of t h i s Order by persona l se rvice o r otherwise ,11 d i r e c t ly or through any corpora t ion , subs id ia ry , d iv i s ion , or other12 device , are hereby permanently r es t r a ined and enjoined, in13 connect ion with the Serv ic ing of any Loan, from assess ing and/or14 co l l ec t ing any Fee fo r a se rv ice unless it i s for se rv ices ac tua l ly15 rendered and i s (a) au thor ized and Clear ly and Prominently disc losed16 by the Loan Instruments , and not prohibi ted by law; (b) express ly17 permi t t ed by law and not proh ib i ted by the Loan Instruments; or18 (c) a reasonable Fee fo r a spec i f i c se rvice requested by a consumer19 t h a t i s assessed and /o r co l lec ted only a f t e r Clear and Prominent20 di sc losure of th e Fee i s provided to the consumer and e xp l i c i t21 consent i s obta ined from the consumer to pay the Fee in exchange fo r22 the se rv ice , and such Fee i s not otherwise proh ib i t ed by law or the23 Loan Instruments .24 I I I .25 IT IS FURTHER ORDERED t h a t Defendants, t h e i r o f f i c e r s ,26 employees, agents , r ep resen ta t ives , and a l l othe r Persons or27 en t i t i e s in ac t ive concer t or par t i c ipa t ion with them who receive28 ac tua l not ice of t h i s Order by persona l se rvice o r otherwise ,

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1 d i r e c t l y or through any corpora t ion , subs id i a ry , d iv i s ion , or othe r2 device , a re hereby permanently r e s t r a in ed and en jo ined , in3 connect ion with the Serv ic ing of any Loan, from assess i n g and /or4 co l lec t ing any Fee fo r a Defaul t -Related Serv ice unless it i s a5 reasonable Fee charged by a t h i rd -par ty se rvice prov ider , inc lud ing6 an A ff i l i a t e of Defendants , fo r a Defaul t -Related Serv ice t h a t i s7 ac tua l ly performed.8 IV.9 IT IS FURTHER ORDERED t h a t Defendants, t h e i r o f f i c e r s ,

10 employees, agen t s , r ep resen ta t ives , and a l l o t h e r Persons or11 e n t i t i e s in ac t ive concer t or p a r t i c i p a t i o n with them who rece ive12 ac tua l not ice of t h i s Order by persona l se rvice or otherwise ,13 d i r e c t ly or through any corpora t ion , subs id i a ry , d iv i s ion , or othe r14 dev ice , are hereby permanently r e s t r a in ed and en jo ined , in15 connect ion with the Serv ic ing of any Loan, from assess i n g and /or16 co l lec t ing any Fee fo r a Defaul t -Related Serv ice performed by an17 A ff i l i a t e of any Defendant, unless the Fee complies with Sect ions I I18 and I I I of t h i s Order and th e amount of th e Fee does not exceed the19 l e s se r of (1) any Fee l im i t a t i o n or al lowable amount fo r the se rvice20 under appl icable s t a t e law, (2) any publ i shed , pre-es tab l i shed Fee21 l im i t a t i o n or al lowable amount fo r the se rvice under the guide l ines22 fo r the appl icable government-sponsored en te rp r i s e inves t ing in th e23 Loan or th e government agency insur ing the Loan ( for a l l o t h e r24 Loans, Federal Nat ional Mortgage Associat ion ("Fannie Mae")25 guide l ines sh a l l app ly) , and (3) the market r a te for the se rv ice .26 To determine th e market ra t e , Defendants s h a l l obtain annual market27 reviews of t h e i r A f f i l i a t e s ' pr ic ing fo r Defaul t -Related Services;28 such market reviews s h a l l be performed by a qua l i f i ed , objec t ive ,

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1 independent rd -pa r ty p ro fe s s iona l , us ing procedures and s tandards2 g en e ra l l y accepted in th e indus t ry to yie ld accu ra t e and r e l i a b l e3 r e s u l t s .4 V.5 IT IS FURTHER ORDERED t h a t , with in one-hundred f i f t y (150) days6 from th e date o f en t ry of t h i s Order , Defendants , t h e i r o f f i c e r s ,7 employees, agen ts , r e p re s e n t a t i v e s , and a l l o t h e r Persons o r8 e n t i t i e s i n ac t ive concer t or p a r t i c i p a t i o n with them who r ece iv e9 ac tua l n o t i ce o f t h i s Order by personal se rv ice or otherwise ,

10 d i r e c t l y o r th rough any corpora t ion , subs id ia ry , div i s ion , o r o t h e r11 dev ice , a re hereby permanent ly r es t r a ined and en jo ined , In12 connect ion with the Serv ic ing of any Loan, from fa i l ing to di sc lose13 Clear ly and Prominent ly th e fol lowing in fo rmat ion :141516171819202122232425262728

A.

B.

At Loan o r i g i n a t i o n o r upon acqu i r ing the Serv ic ing r i g h t sto the consumer ' s Loan, Defendants sh a l l di sc lose any useof A f f i l i a t e s fo r D efau l t -Rela ted Serv ices and if Fees a reassessed fo r those se rv ice s ;I f th e consumer ' s Loan goes in to d e fa u l t and p r io r toa ssess i n g any Fees fo r Defau l t -Re la ted Se rv i ces ,Defendants ' n o t i ce of d e fa u l t s h a l l di sc lose (1 ) any useo f A f f i l i a t e s fo r Defau l t -Re la t ed Se rv i ces ; (2) if Feesare assessed fo r t hose se rv ice s ; and (3 ) a l ink to aschedule o f Fees fo r those se rv ice s ("Fee Schedule") onDefendants ' webs i t e ( s ) . This Fee Schedule s h a l l inc lude adesc r ip t ion of the Fees t h a t may be charged, th e amounto r , where ap p l i cab l e , the range o f each Fee, and, if theFee w i l l o r may be paid to an A f f i l i a t e , a di sc losure of

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123 C.

t h a t f ac t and the names of the a f f i l i a t e d se rv iceproviders ; andThe Fee Schedule sh a l l be posted and ava i lab le on th e

4 Defendants ' website{s) and a copy of the Fee Schedule5 sh a l l be mailed or del ivered to the consumer upon reques t ,6 a t no cos t to the consumer.7 VI.8 IT IS FURTHER ORDERED t ha t , fo r e igh t (8) years a f t e r the date9 of ent ry of t h i s Order, Defendants, t he i r of f i c e r s , employees,

10 agen t s , r ep resen ta t ives , and a l l other Persons or en t i t i e s in ac t ive11 concer t or p a r t i c i p a t i o n with them who rece ive ac tu a l not ice of t h i s12 Order by personal se rvice or o therwise, d i r e c t ly o r through any13 corpora t ion , subs id i a ry , d iv i s ion , or other device , are hereby14 permanently r es t r a ined and enjoined, in connect ion wi th the15 Servicing of any Loan, from (I) i n i t i a t i ng a forec losure ac t ion , or16 assess ing Fees in connect ion with an ac tua l or threa tened17 forec losure ac t ion , u n t i l the Defendants have reviewed Competent and18 Rel iab le Evidence t h a t s u b s t an t i a t e s t h a t th e consumer i s in defau l t19 under the terms of th e Loan Instruments; and (2) consummating a20 forec losure sa le u n t i l Defendants have inves t iga ted any21 non-f r ivo lous disputes by th e consumer and informed the consumer of22 th e r e su l t s of the inves t iga t ion .23 Bankruptcy Servic ing Requirements24 VII.25 IT IS FURTHER ORDERED t ha t , within t h i r ty (30) days of the date26 of ent ry of t h i s Order, Defendants, t he i r o f f i c e r s , employees,27 agen t s , r ep resen ta t ives , and a l l other Persons or en t i t i e s in ac t ive28 concer t or par t i c ipa t ion with them who rece ive ac tua l not ice of t h i s

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1 Order by personal se rv ice or othe se , d i r e c t ly or through any2 corpora t ion , subs id i a ry , d iv i s ion , or othe r dev ice , are hereby3 permanently r es t r a ined and en jo ined , in connect ion with the f i l i ng4 of any proof of c la im in a Chapter 13 Bankruptcy case fo r a Loan5 serv iced by any Defendant, from f a i l i ng to f i l e with the proof of6 claim (1) a copy of th e Loan Ins t ruments o r, if a Loan Inst rument7 has been l o s t or des t royed , a sworn s ta tement of the circumstances8 of the l o s s or des t ruc t ion ; and (2) a d e t a i l ed i t emiza t ion of a l l9 amounts claimed. Provided, however, t h a t nothing in t h i s Sect ion

10 s h a l l requi re Defendants to do anyth ing proh ib i t ed by the United11 Sta te s Bankruptcy Code, th e Federa l Rules of Bankruptcy Procedure,12 o r any loca l ru l e or cour t o rd e r in a Chapter 13 Bankruptcy.13 VIII .14 IT IS FURTHER ORDERED t ha t , within two-hundred seventy (270)15 days of the date of ent ry of t h i s Order (or as otherwise agreed to16 by Commission counse l ) , Defendants, t he i r o f f i c e r s , employees,17 agen t s , r ep resen ta t ives , and a l l othe r Persons or e n t i t i e s in ac t ive18 co n ce r t or par t i c ipa t ion with them who rece ive ac tua l not ice of t h i s19 Order by personal se rvice or otherwise , d i r e c t ly or through any20 corpora t ion , subs id i a ry , d iv i s ion , or othe r dev ice , a re hereby21 permanently r es t r a ined and en jo ined , in connect ion with th e22 Serv ic ing of any Loan fo r a consumer in Chapter 13 Bankruptcy, from23 f a i l i n g to provide the consumer and the Chapter 13 t rus t ee with an24 in fo rmat iona l not ice on a monthly bas i s , in wri t ing and a t no co s t25 to the consumer or the t rus t ee , t h a t con ta ins the fo l lowing26 informat ion in a Clear and Prominent manner:2728

A.

B.th e unpaid p r in c ip a l balance ;th e p o s t -p e t i t i o n Monthly Payment amount;

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101112

C.

D.

E.

F.

if t he re are changes in the pos t i t i on Monthly Paymentamount, th e reason fo r and amount of the change;a complete i t emiza t ion of each and every Fee assessedduring the p r i o r month, including the amount of each Fee,a descr ip t ion of each Fee, and the date t h a t each Fee wasassessed ;a complete i t emiza t ion of a l l payments received during th ep r i o r month, a t o t a l of any amounts held in suspense orotherwise not app l ied to the Loan account , and ani t emiza t ion and descr ip t ion of any Fee amounts t h a t remainoutstanding on the Loan account ; andthe t o l l - f r e e te lephone number and address fo r the

13 consumer and the t rus t ee to use to con tac t the Defendants14 with Loan account ques t ions .15 Provided, bowever , t h a t nothing in t h i s Sect ion sh a l l requi re16 Defendants to do anyth ing proh ted by the United Sta te s Bankruptcy17 Code, the Federal Rules of Bankruptcy Procedure, or any loca l ru le18 or court order in a Chapter 13 Bankruptcy.19 IX .20 IT IS FURTHER ORDERED t h a t Defendants, t h e i r o f f i c e r s ,21 employees, agen t s , r ep resen ta t ives , and a l l othe r Persons or22 e n t i t i e s in ac t ive concer t o r p a r t i c i p a t i o n with them who rece ive23 ac tua l not ice o f t h i s Order by personal se rvice or otherwise ,24 d i r e c t ly or through any corpora t ion , subs id i a ry , d iv i s ion , or othe r25 device , are hereby permanently r es t r a ined and enjoined, in26 connect ion with the Servicing of any Loan fo r a consumer in Chapter27 13 Bankruptcy, from fa i l ing to provide the consumer and the Chapter28 13 t rus t ee with an in fo rmat iona l not ice on an annual bas i s , in

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1 wri t ing and a t no co s t to th e consumer o r the t r u s t e e , t h a t2 di sc lose s , Clear ly and Prominent ly , the amount and nature of any3 accrued Escrow Shor tage and /or Escrow Def ic iency . Such not ice s h a l l4 be in a form cons i s t en t with th e requi rements of 24 C.F.R. 3500.175 and may be provided along wi th th e monthly in fo rmat iona l not ice6 required under Sect ion VII I o f t h i s Order . Provided, bowever , t h a t7 nothing in t h i s Sect ion sh a l l r eq u i r e Defendants to do anyth ing8 proh ib i t ed by the United Sta te s Bankruptcy Code, the Federa l Rules9 o f Bankruptcy Procedure , o r any l oca l ru l e o r cour t o rd e r in a

10 Chapter 13 Bankruptcy.11 x.12 IT IS FURTHER ORDERED t h a t Defendants , t h e i r o f f i c e r s ,13 employees, agen ts , rep re sen ta t ive s , and a l l o t h e r Persons o r14 e n t i t i e s in ac t ive co n ce r t o r par t i c ipa t ion with them who rece ive15 ac tua l not ice o f t h i s Order by personal se rvice or o therwise ,16 d i r e c t l y or through any corpora t ion , su b s i d i a ry , div i s ion , o r o t h e r17 dev ice , a re hereby permanently r es t r a ined and en jo ined , in18 connect ion with the Serv ic ing o f any Loan t h a t incur red any Fee,19 Escrow Shor tage , and/or Escrow Defic iency during a Chapter 1320 Bankruptcy, from co l l ec t i n g any such Fee, Escrow Shor tage , and /or21 Escrow Defic iency a f t e r Defendants obtain r e l i e f from the bankruptcy22 s tay o r , if r e l i e f from s t ay i s not sought or g ran ted , a f t e r the23 deb tor i s discharged or the bankruptcy case i s dismissed, un less24 Defendants (1) obta ined s p ec i f i c cour t approval fo r the charges25 during the Chapter 13 Bankruptcy case , o r (2) provided to the26 consumer the no t i ces requ i red under Sect ions VIII and IX of t h i s27 Order .28

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1 Data Integr i ty Requirements2 XI.3 IT IS FURTHER ORDERED t h a t Defendants, in connect ion wi th the4 Servicing of any Loan in Chapter 13 Bankruptcy, s ha l l , no l a t e r than5 nine ty (90) days a f t e r the date of ent ry of t h i s Order, es tab l i sh6 and implement, and t h e re a f t e r maintain , a comprehensive data7 i n t e g r i t y program t h a t i s reasonably designed to ensure th e accuracy8 and completeness of data and othe r information regarding such Loans9 p r i o r to and while Servicing them ("data i n t e g r i t y program"). Such

10 data i n t e g r i t y program, the content and implementat ion of which must1 1 be fu l ly documented i n wr i t i ng , s ha l l be appropr ia te to the na tu re ,12 s i ze , complexi ty, and scope of Defendants ' a c t i v i t i e s , and sh a l l13 include:141516171819

A.

B.

C.

the des igna t ion o f an employee or employees to beaccountable fo r the da ta i n t e g r i t y program;the regu la r t e s t ing or monitor ing of the ef fec t iveness ofthe data i n t e g r i t y program; andthe eva lua t ion and adjus tment o f the data i n t e g r i t yprogram in l i gh t of th e r e s u l t s of the t e s t ing and

20 monitor ing requ i red by Subsect ion B, any mate r i a l changes21 to Defendants ' opera t ions o r business arrangements , or any22 othe r circumstances t h a t Defendants know or have reason to23 know may have a mate r i a l impact on the ef fec t iveness of24 the data i n t e g r i t y program.25 XII.26 IT IS FURTHER ORDERED t h a t Defendants obta in an assessment and27 repor t (an "Assessment") from a q u a l i f i ed , objec t ive , independent28 t h i rd -par ty profes s iona l , using procedures and standards genera l ly

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1 accep ted in th e p ro fess i o n , with in tw o hundred seven ty (270) days2 a f t e r the da te of en t ry of the Order, and b ien n i a l l y t h e re a f t e r fo r3 e i g h t (8 ) years a f t e r en t ry o f th e Order , t h a t :4 A. se t s fo r th th e s p ec i f i c data i n t e g r i t y program t h a t56789

1011

B.

C.

Defendants have implemented and mainta ined dur ing th erepor t ing per iod ;exp la ins how such data i n t e g r i t y program lS appropr ia te toDefendants ' s i ze and complexi ty , and th e natu re and scopeof Defendants ' a c t i v i t i e s ; andexp la ins how th e data i n t e g r i t y program meets or exceedsth e pro tec t ions requ i red by Sect ion XI of t h i s Order .

12 Defendants s h a l l prov ide a copy of th e f i r s t Assessment to th e13 Commission with in ten (10) days a f t e r th e Assessment i s del ivered to14 Defendants . Defendants sh a l l provide a copy of a l l : plans , repor t s ,15 s t u d i e s , reviews, a u d i t s , au d i t t r a i l s , p o l i c i e s , t r a in in g16 mate r i a l s , and assessment s , whether prepared by or on b eh a l f of17 Defendants , r e l i e d upon to prepare such Assessment , to th e18 Commission with in t h i r t y (30) days of reques t . A ll subsequent19 b i e n n i a l Assessments sh a l l be re t a ined by Defendants and a copy20 prov ided to th e Commission with in t h i r t y (30) days of reques t .21 Monetary Re l i e f22 XIII .23 IT IS FURTHER ORDERED t h a t :24 A. Defendants , wi thout admi t t ing any v io l a t i o n o f law, s h a l l25 pay th e amount o f one hundred e igh t mi l l i on do l la r s26 ($108,000,000.00) to remedy th e v io la t ions of law a l l eged27 by th e FTC. On or before f ive (5) bus iness days a f t e r th e28 date of en t ry o f t h i s Order , Defendants s h a l l wire

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B.

t r a n s fe r the sum of one hundred e igh t mi l l i on d o l l a r s($108,000,000.00) to the Commission or such agent as theCommission may d i r e c t , pursuant to i n s t ruc t ions providedby the Commission. A ll funds paid pursuant to t h i s Ordersh a l l be deposi ted in to a fund admin is te red by th eCommission or i t s agent to be used fo r equ i t ab le r e l i e ffo r consumers whose Loans were serv iced by Defendantsp r i o r to t he i r acqu is i t ion by Bank of America, includingbu t not l imi t ed to consumer redress and any a t t endan texpenses fo r th e adminis t ra t ion of th e redress program.In the event t h a t d i r e c t redress to consumers i s wholly orpar t i a l l y imprac t i cab le o r funds remain a f t e r redress i scomple ted, the Commission may apply any remaining fundsfo r such o t h e r equ i t ab le r e l i e f ( inc lud ing consumerinformat ion remedies) as it determines to be reasonablyr e l a t ed to the Defendants ' prac t ices a l leged in theComplaint . Any funds not used fo r such equ i t ab le r e l i e fsh a l l be deposi ted as equi table disgorgement in to theUnited Sta te s Treasury . Defendants sh a l l have no r i g h t tochal lenge the FTC's choice of remedies under t h i s Sect ion .In th e event t h a t Defendants de fau l t on any obl iga t ion tomake any payment se t fo r th in t h i s Order , which de fau l tcon t inues fo r ten (10) days beyond th e due date of th epayment, the e n t i r e unpaid amount t oge the r with i n t e r e s t ,computed pursuant to 28 U.S.C. 1961(a) from the date ofdefau l t to the date o f payment, s h a l l immediately becomedue and payable . Notwi ths tanding any othe r prov i s ion oft h i s Order, Defendants agree t h a t i f they f a i l to meet any

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C.

D.

payment obl iga t ions se t fo r th in t h i s Order , Defendantss h a l l pay the cos t s and a t to rneys ' fees incur red by theCommission or i t s agents in any a t tempts to c o l l e c tamounts due pursuan t to t h i s Order .Defendants r e l inqu ish a l l dominion, con t ro l , and title toth e funds paid to th e f u l l e s t ex ten t permit ted by law.Defendants sh a l l make no claim to or demand fo r re tu rn ofthe funds, d i r e c t ly or i n d i r e c t l y , through c o u n s e l o rotherwise .Defendants agree t h a t the f ac t s as a l leged in th eComplaint f i l e d in t h i s ac t ion sh a l l be taken as t ruewithout fu r ther proof in any bankruptcy case of e i t h e r ofthe Defendants o r subsequent c i v i l l i t i ga t i on pursued bythe Commission to enforce i t s r igh t s to any payment ormoney judgment pursuan t to t h i s Order . For th e purpose ofany subsequent proceeding to enforce payments requ i red byt h i s Sect ion of t h i s Order , including any ac t ion f i l ed ina bankruptcy case of e i the r of the Defendants , theDefendants waive any r i g h t to con te s t the a l l eg a t i o n s in

20 th e Commission 's Complaint .21 Data22 XIV.23 IT IS FURTHER ORDERED t h a t , subjec t to the FTC's c e r t i f i c a t i o n24 of compliance with th e Right to Financia l Privacy Act, to f ac i l i t a t e25 redress under Sect ion XIII above, th e Defendants sh a l l provide th e26 Commission and /or i t s des ignated agen t , within t h i r t y (30) ca lendar27 days a f t e r rece iv ing a wri t t en reques t by the Commission or i t s28 des ignated agent , with a l l in fo rmat ion reasonably requ i red to

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1 ad min i s t e r r ed re ss . Defendants s h a l l prov ide a complete2 e l ec t r o n i ca l l y s to red data se t in a compat ib le format (as reasonably3 determined by th e FTC and /or i t s agen t ) .4 Compliance Monitoring56 IT IS FURTHER ORDERED t h a t , fo r th e purpose of moni tor ing and7 i n v e s t i g a t i n g compl iance with any p ro v i s io n o f t h i s Order ,8 A. Within t h i r t y (30) days o f r e c e i p t o f wri t t en not ice from9 a rep re sen ta t ive of the Commission, Defendants each s h a l l

10111213141516171819202122232425262728

B.

C.

submit add i t iona l wr i t t en repor t s , which a re t rue andaccu ra t e and sworn to under penal ty of pe r ju ry ; producedocuments fo r i n sp ec t i o n and copying; appear fo rdeposi t ion ; and prov ide en t ry during normal bus iness hoursto any bus iness l oca t ion in each Defendan t ' s possess ion ord i r e c t o r i n d i r e c t co n t ro l t o i n sp ec t the bus inessopera t ion ;In ad d i t i o n , th e Commission i s au thor ized to use a l l o t h e rl awfu l means, i n c lu d in g but not l imi t ed to :1 .

2 .

obta in ing discovery from any Person, wi thout fu r t h e rl eave o f co u r t , us ing the procedures prescr ibed byFed. R. Civ . P. 30, 31, 33, 34, 36, 45 and 69; andhaving its rep re sen ta t ive s pose as consumers andsupp l i e r s to Defendants , t h e i r employees, or anyo t h e r e n t i t y managed o r con t ro l l ed in whole o r inp a r t by any Defendant , wi thout th e necess i ty ofi d e n t i f i c a t i o n o r p r io r not i ce ;

Defendants each s h a l l permi t rep re sen ta t ive s of th eCommission to in te rv iew any employer, co n su l t an t ,

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1 independent con t r ac to r , r ep resen ta t ive , agent , or employee2 who has agreed to such an in te rv iew, r e l a t i ng in any way3 to any conduct sub jec t t o t h i s Order . The Person4 in te rv iewed may have counsel presen t .5 Provided however, t ha t nothing in t h i s Order sha l l l imi t the6 Commission 's l awfu l use of compulsory process , pursuan t to Sect ions7 9 and 20 of the FTC Act , 15 U.S.C. 49, 57b- l , to ob ta in any8 documentary ma ter i a l , t ang ib l e t h ings , tes t imony, or in fo rmat ion9 re levant to unfa i r or decept ive ac t s or p r a c t i c e s in or a f fec t ing

10 commerce (wi th in the meaning of 15 U.S.C. 45(a) (1))11 Compliance Reporting12 XVI.13 IT IS FURTHER ORDERED t ha t , in order t ha t compliance with the14 prov i s ions of t h i s Order may be monitored:15 A. For a per iod of f ive (5) years from the da te of en t ry of16 t h i s Order , Defendants s ha l l no t i fy th e Commission of any171819202122232425262728

changes in s t ruc ture of any Defendant or any bus inessen t i t y t ha t any Defendant d i r ec t l y or i nd i r ec t l y con t ro l s ,or has an ownership i n t e r e s t in , t ha t may a f f e c tcompliance ob l iga t ions a r i s ing under t h i s Order , inc ludingbut not l im i t ed to : incorpora t ion or o ther o rgan iza t ion ; ad isso lu t ion , assignment , sa l e , merger , or o ther ac t ion ;th e crea t ion or d isso lu t ion of a subs id i a ry , parent , o rAf f i l i a t e t ha t engages in any ac t s or p r a c t i c e s subject tot h i s Order , o r a change in th e bus iness name or address ,a t l ea s t t h i r t y (30) days pr i o r to such change, providedt ha t , with respect to any such change in the bus inessen t i t y about which a Defendant l ea rns l e s s than t h i r t y

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1234 B.56789

1011121314151617 C.181920 D.2122232425262728

(30) days p r i o r to the date such ac t ion i s to t ake p lace ,such Defendant s h a l l not i fy th e Commission as soon asp ra c t i c a b l e a f t e r o b ta in in g such knowledge.On e hundred e igh ty (180) days a f t e r the da te of en t ry oft h i s Order and annua l ly t h e re a f t e r fo r a per iod of t h r ee(3 ) years , Defendants each s h a l l prov ide a wri t t en r ep o r tto th e FTC, which i s t r u e and accura te and sworn to underp en a l ty o f p e r j u ry , s e t t i n g fo r th in d e t a i l th e manner andform In which they have complied and a re complying witht h i s Order . This r ep o r t s h a l l inc lude , but no t be l i mi t edto :1 . A copy o f each acknowledgment of r e c e i p t o f t h i s

Order , obta ined pursuan t to th e Sec t ion t i t l e d"Dis t r ibu t ion o f Order;u

2 . Any changes r eq u i red to be r ep o r t ed under Subsect ionA of t h i s Sect ion .

Each Defendant s h a l l not i fy th e Commission of the f i l i ngo f a bankruptcy p e t i t i o n by such Defendant with in f i f t e en(15) days o f f i l i n g .For the purposes of t h i s Order , Defendants s h a l l , unlessothe rwise di rec t ed by th e Commission 's au thor izedrep re sen ta t ive s , send by overn igh t co u r i e r a l l r ep o r t s andn o t i f i c a t i o n s r eq u i red by t h i s Order to th e Commission, toth e fol lowing address :

Associa te Di rec to r fo r EnforcementBureau of Consumer Pro tec t ionFedera l Trade Commission600 Pennsylvania Avenue, N.W.Washington, D.C. 20580RE: FTC v. Countrywide Home Loans, I n c . , e t a l .

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Provided t h a t , in l i eu of overn igh t cour i e r , Defendantsmay send such repor t s or no t i f i ca t ions by f i r s t - c l a s smail , but only if Defendants contemporaneously send ane lec t ron ic vers ion of such repor t or n o t i f i c a t i o n to theCommission a t :

E. For purposes of the compliance repor t ing and monitor ingrequired by t h i s Order , th e Commission i s au thor ized tocommunicate d i r e c t ly with each Defendant.

RecordkeepingXVII.

IT IS FURTHER ORDERED t h a t , fo r a per iod of e igh t (8) yearsthe date of en t ry of t h i s Order , Defendants are hereby

13 r es t r a ined and enjoined, in connect ion wi th the Servicing of any14 Loan, from fa i l ing to c rea t e and re t a in , fo r a per iod of three (3)15 years a f t e r th e date of prepara t ion of the record , the fo l lowing16 records :171819202122232425

262728

A.

B.

Accounting records t h a t r e f l e c t th e cos t of Loans acquiredand /o r so ld ; revenues genera ted from Servicing Fees and /orFees paid by and/or imposed on consumers; and thedisbursement of such revenues;Personnel records accura te ly r e f l e c t i n g : th e name,address , and te lephone number of each Person employed inany capac i ty by such business, including as an independentcon t rac to r ; t h a t Person ' s job title or pos i t ion ; the dateupon which the Person commenced work; and the date andreason fo r the Person ' s t e rmina t ion , if appl icable ;

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1011

1213

C.

D.

E.F.

Consumer f i l e s contain ing the names, addresses , phonenumbers, do l l a r amounts paid , and descr ip t ion of Fees orother charges imposed;Writ ten complain ts or disputes and Qual i f ied Writ tenRequests , as defined in 12 U.S .C. 2605 (e) (1) (8) , fromconsumers (whether received di rec t ly , ind i rec t ly orthrough any th i rd party) and responses to thosecomplain ts , disputes , or reques ts ;Copies of a l l t ra in ing mater ia l s and pol icy manuals; andAll records and documents necessary to demonstrate fu l lcompliance with each prov i s ion of t h i s Order, includingbut not l imi ted to , copies of acknowledgments of r ece ip tof t h i s Order requ i red by th e Sect ions t i t l ed

14 "Dis t r ibu t ion of Order" and "Acknowledgment of Receipt of15 Order" and a l l repor t s submit ted to the FTC pursuant to16 the Sect ion t i t l ed "Compliance Report ing ."17 Distr ibut ion o f Order18 XVIII.19 IT IS FURTHER ORDERED t h a t , fo r a period of f ive (5) years from20 the date of ent ry of t h i s Order, Defendants sh a l l d e l iv e r copies of21 the Order as d i rec ted below:22232425262728

A. Each Defendant sha l l d e l iv e r a copy of t h i s Order to (1)a l l of i t s pr inc ipa l s , o f f i c e r s , d i rec to rs , and managers;(2) a l l of i t s employees, agents , and r ep resen ta t ives whoengage in conduct re l a t ed to the sub jec t mat te r o f t h i sOrder ; and (3) any business e n t i t y resu l t ing from anychange in s t ruc tu re se t for th in Subsect ion A of theSect ion t i t l ed "Compliance Report ing ." For cur ren t

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personnel , de l ive ry should be within t h i r ty (30) days ofse rvice o f t h i s Order upon such Defendant . For newpersonnel , de l ive ry sh a l l occur p r i o r to them assumingt he i r r e s pons ib i l i t i e s . For any business e n t i t y resu l t ingfrom any change in s t ruc tu re se t for th in Subsect ion A ofthe Sect ion t i t l ed "Compliance Report ing ," de l ive ry sh a l lbe a t l e a s t ten (10) days p r i o r to the change ins t ru c t u re .Defendants must secure a s igned and dated s ta tement

10 acknowledging r ece ip t of the Order, within t h i r t y (30)11 days of de l ive ry , from a l l Persons rece iv ing a copy of the12 Order pursuant to t h i s Sect ion.13 Acknowledgment o f Receipt o f Order14 XIX.15 IT IS FURTHER ORDERED t ha t each Defendant, within f ive (5)16 business days of rece ip t of t h i s Order as en tered by the Court , must17 submit to the Commission a t r u th fu l sworn s ta tement acknowledging18 r ece ip t of t h i s Order.19 Retention o f Jur isd ic t ion20 XX.21 IT IS FURTHER ORDERED t h a t t h i s Cour t sha l l re t a in ju r i sd ic t ion22 of t h i s mat te r fo r purposes of cons t ruc t ion , modi f ica t ion , and23 enforcement of t h i s Order.2425 IT IS SO ORDERED.2627 DATED: - - - - - - - - - - - - - - - - - - - -28 UNITED STATES DISTRICT JUDGE

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1 APPROVED AS TO FORM AND CONTENT:23

456 WILLARD K. TOMGenera l Counsel78

9 LUCY E. ORRISHEATHER ALLEN10 LYNETTE HOTCHKISS

11 Federa l Trade Commission600 Pennsylvania Avenue12 Washington, D.C. 20580Tel : (202) 326-322413 Fax: (202) 326-376814 John D. Jacobs (Local Counsel)j jacobs@ftc .gov15 Cal i fo rn ia Bar No. 134154Federa l Trade Commission16 10877 Wilsh i re Blvd . , Ste . 700Los Angeles, CA 9002417 Tel : (310) 824-4343Fax: (310) 824-438018 Attorneys fo r P l a i n t i f f19 Federa l Trade Commission20

DATED: ---"'-_-'---'=--____ 2 0 1 02122232425262728

lho tchk iss@ftc .gov

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1 DEFENDANTS23 FOR DEFENDANTS COUNTRYWIDE HOME LOANS, INC. AND BAC HOME LOANS

SERVICING LP4

: I I - : - G : : . . . : : : . . : . . . : ~ = - = - - - 1 _ ! J - = - - I - f J . I - - - - __imothy S. Huval7 Senior Vice Pres iden tHome Loans Serv ic ing Executive8r,(,9 DATED: ~ ~ ~ ~ ~ J - - ~ 3 _ ~ - - _ , 2010

1011

12 Y SPIGE13 PETER TODARO, ESQ.BRANDT LEIBE, ESQ.14 King & Spalding LLP1700 Pennsylvania Avenue, NW, Sui te 20015 Washington, DC 20006-4706Tel: (202) 626 262616 Fax: (202) 626 373717 Attorney fo r Defendants1819 DATED: , 2010202122232425262728

Order - Federal Trade Commission, Plaintiff, V. Country Wide Home Loans, Inc.

Documents

Transcript of Order - Federal Trade Commission, Plaintiff, V. Country Wide Home Loans, Inc.