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Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 1 of 355 Page ID #:10071234567UNITED STATES DISTRICT COURTCENTRAL DISTRICT OF CALIFORNIA8910FEDERAL TRADE COMMISSION,111213141516171819202122Plaintiff,Case No. 10-4193-JFW-SSXv.COUNTRYWIDE HOME LOANS, Inc.,a corporation, andSUPPLEMENTAL CONSENTJUDGMENT AND ORDERBAC HOME LOANS SERVICING, LP,a limited partnership,Defendants.Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), and Defendant, BAC HomeLoans Servicing, LP (“BAC Home Loans”), jointly stipulate to this Supplemental Consent Judgmentand Order (“Supplemental Order”), which resolves Plaintiff’s allegation that BAC Home Loans violatedthe Consent Judgment and Order (“Consent Order”) entered by this Court on June 15, 2010. BACHome Loans received notice of the Consent Order on June 17, 2010.2324252627281
Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 2 of 355 Page ID #:10081NOW THEREFORE IT IS HEREBY ORDERED AS FOLLOWS:2FINDINGS3A.This Court has jurisdiction over the subject matter of this case and over BAC Home Loans.4B.Venue in this district is proper under 28 U.S.C. § 1391(b) and (c), and 15 U.S.C. § 53(b).5C.The Court finds that entry of this Supplemental Order is in the public interest.6D.Effective July 1, 2011, and after proper notice was provided to the FTC, BAC Home Loans7merged with and into Bank of America, N.A., an entity not subject to the Consent Order and8exempt from the FTC’s jurisdiction. Therefore, upon entry of this Supplemental Order, all9prospective injunctive provisions and other prospective requirements of the Consent Order shall1011terminate as to BAC Home Loans.E.From June 17, 2010, through June 30, 2011, the Consent Order, inter alia, prohibited BAC12Home Loans from: (1) making misrepresentations about the Status of Loans or amounts owed13on Loans (Paragraph I.A); (2) assessing and/or collecting any Fee for a service unless it is (a)14authorized and Clearly and Prominently disclosed by the Loan Instruments and not prohibited by15law, (b) expressly permitted by law and not prohibited by the Loan Instruments, or (c) for a16service requested by a consumer after disclosure and consent (Paragraph II); (3) assessing and/or17collecting title Fees that were not Clearly and Prominently disclosed on BAC Home Loans’ Fee18Schedule (Paragraph V); (4) initiating foreclosure actions or assessing Fees in connection with19an actual or threatened foreclosure action prior to the review of Competent and Reliable20Evidence demonstrating that the consumer is in default under the terms of the Loan (Paragraph21VI); (5) consummating foreclosure sales without having investigated non-frivolous disputes by22consumers (Paragraph VI); (6) filing proofs of claim in connection with consumers’ Chapter 1323Bankruptcy proceedings without providing copies of Loan Instruments and a detailed itemization24of all amounts claimed (Paragraph VII); (7) Servicing Loans without an adequate data integrity25program in place (Paragraph XI); and (8) failing to provide all information reasonably required26to administer redress within thirty (30) calendar days of a written request by the Commission27282
Case 2:10-cv-04193-JFW-SS Document 1512Filed 03/22/12 Page 3 of 355 Page ID #:1009(Paragraph XIV).F.The FTC alleges that, during the period from June 17, 2010, through June 30, 2011, BAC Home3Loans has violated the provisions of the Consent Order enumerated in Paragraph E, as follows:41.BAC Home Loans misrepresented amounts owed on Loans in violation of Paragraphs I.A5and VI of the Consent Order through the submission to courts, and service on consumers,6of affidavits that contained Fees unsupported by Competent and Reliable Evidence;72.BAC Home Loans also misrepresented the status of Loans in violation of Paragraph I.A8of the Consent Order by improperly completing foreclosure sales where a material9change in the circumstances, such as a short-sale, loan modification, or bankruptcy, had1011occurred before the sale was completed;3.BAC Home Loans assessed and/or collected Fees for Default-Related Services that were12not authorized and Clearly and Prominently disclosed by the Loan Instruments and/or not13permitted by law in violation of Paragraph II of the Consent Order;144.BAC Home Loans assessed and/or collected title Fees that were not Clearly and15Prominently disclosed on BAC Home Loans’ Fee Schedule in violation of Paragraph V16of the Consent Order;175.BAC Home Loans filed proofs of claim in Chapter 13 Bankruptcy actions against18consumers without attaching copies of the Loan Instruments in violation of Paragraph VII19of the Consent Order;206.BAC Home Loans serviced Loans in Bankruptcy without an adequate data integrity21program, including without sufficient data integrity to ensure the accuracy of post-22petition payment amounts, interest amounts, and total amounts, included in proofs of23claim filed in Chapter 13 bankruptcy actions, in violation of Paragraph XI of the Consent24Order; and25267.BAC Home Loans failed to provide all information reasonably required to administerredress, in violation of Paragraph XIV of the Consent Order, which required BAC Home27283
Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 4 of 355 Page ID #:10101Loans to provide that information within 30 days of the Consent Order’s entry.2Specifically, on June 22, 2010, the Commission requested information from BAC Home3Loans that would enable the Commission to determine the identities of consumers4entitled to redress and the amounts necessary to compensate those consumers. BAC5Home Loans did not provide complete and accurate information in response to that6request until May 2011.7G.BAC Home Loans does not admit to any of the allegations set forth herein, and entry of this8Supplemental Order is not an admission of any such allegations of wrongdoing or violation of9law. Nonetheless, BAC Home Loans stipulates and agrees to entry of this Supplemental Order1011to settle and resolve these disputes.H.BAC Home Loans waives: (a) all rights to seek appellate review or otherwise challenge or12contest the validity of this Supplemental Order; (b) any claim BAC Home Loans may have13against the Commission, its employees, representatives, or agents that relate to the matter stated14herein; (c) all claims under the Equal Access to Justice Act, 28 U.S.C. § 2412, as amended by15Pub. L. 104-121, 110 Stat. 847, 863-64 (1996); and (d) any rights to attorneys’ fees that may16arise under said provision of law.17I.The parties, by and through their counsel, have agreed that entry of this Supplemental Order18resolves all matters in dispute between them concerning Defendants’ compliance with the19Consent Order up to the date of entry of this Supplemental Order. All claims by the FTC against20BAC Home Loans related to the Consent Order shall be settled and resolved, and the FTC21relinquishes and releases any right it may have to bring any further enforcement action under the22Consent Order as to BAC Home Loans, except as provided below.23DEFINITIONS24For purposes of this Supplemental Order, the following definitions shall apply:251.26“BAC Home Loans” shall mean BAC Home Loans Servicing, LP, formerly doingbusiness as Countrywide Home Loans Servicing, LP, and its successors and assigns, by whatever names27284
Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 5 of 355 Page ID #:10111they might be known, but not including any Bank. Effective July 1, 2011, BAC Home Loans Servicing,2LP merged with and into Bank of America, N.A., an entity not subject to the Consent Order and exempt3from the FTC’s jurisdiction. For purposes of this Supplemental Order only, Bank of America4Corporation agrees to assume the obligations of BAC Home Loans Servicing, LP, solely with respect to5any monetary liability arising from alleged violations of Home Loans of the Consent Order from June617, 2010, through June 30, 2011.72.“Bank” shall mean a bank that is exempt from the FTC’s jurisdiction pursuant to Section85(a)(2) of the FTC Act, 15 U.S.C. § 45(a)(2), including Bank of America, N.A. “Bank” shall not9include any Person or entity controlled directly or indirectly by a bank that is not itself a bank, such as10an operating subsidiary or Affiliate of a bank that is not itself a bank.11123.Supplemental Order.1314“First Declaration” shall mean the declaration made pursuant to Paragraph I.E of this4.“Second Declaration” shall mean the declaration made pursuant to Paragraph I.F of thisSupplemental Order.15I. MONETARY RELIEF16IT IS HEREBY ORDERED that, in view of the FTC’s allegations that BAC Home Loans assessed17and/or collected Fees of thirty-six million, one hundred thousand and thirty-four dollars ( 36,100,034) in18violation of the Consent Decree, and BAC Home Loans’ representation in the First Declaration that it19has remediated twenty-eight million, forty-two thousand and twenty-four dollars ( 28,042,024) of such20Fees, resulting in unremediated consumer losses of up to eight million, fifty-eight thousand, and ten21dollars ( 8,058,010):22A.Judgment is entered in the amount of eight million, fifty-eight thousand, and ten dollars23( 8,058,010) to be paid by and through Bank of America Corporation to compensate consumers24for losses sustained as a result of BAC Home Loans’ alleged violations of Paragraphs I.A, II, V,25VI, VII, and XI of the Consent Order.26B.From June 17, 2010, through June 30, 2011, BAC Home Loans, as set forth in the First27285
Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 6 of 355 Page ID #:10121Declaration, assessed and/or collected Fees of thirty-six million, one hundred thousand and2thirty-four dollars ( 36,100,034) that the FTC alleges caused violations of Paragraphs II and V of3the Consent Order, as set forth in the allegations in Paragraphs F.3 and F.4 of the Findings4section. This includes Fees BAC Home Loans assessed and/or collected for Default-Related5Services that the FTC alleges are prohibited by the Consent Order, including:61.7Home Loans’ Fee Schedule in violation of Paragraph V of the Consent Order; and82.9Fees for Default-Related Services that the FTC alleges were not authorized and Clearlyand Prominently disclosed by the loan instruments and/or not permitted by law, in1011Title Fees that the FTC alleges were not Clearly and Prominently disclosed on BACviolation of Paragraph II of the Consent Order.C.As set forth in the First Declaration, BAC Home Loans has remediated twenty-eight million,12forty-two thousand and twenty-four dollars ( 28,042,024) of the Fees set forth in Paragraph I.B13by reversing or refunding all such Fees that were assessed to and/or collected from any14consumers.15D.BAC Home Loans shall satisfy the judgment in Paragraph I.A by providing to the FTC the First16Declaration required by Paragraph I.E and the Second Declaration required by Paragraph I.F that17collectively demonstrate it met each of the following conditions:181.Compensated consumers for all Fees BAC Home Loans assessed and/or collected for19Default-Related Services that the FTC has identified and alleges were prohibited by the20Consent Order, from June 17, 2010, through June 30, 2011, including:21a.2223Title Fees that the FTC alleges were not Clearly and Prominently disclosed onBAC Home Loans’ Fee Schedule;b.Fees for Default-Related Services that the FTC alleges were not authorized and24Clearly and Prominently disclosed by the loan instruments and/or not permitted25by law.26c.Such compensation shall include, at a minimum, reversal or refund of all such27286
Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 7 of 355 Page ID #:10131Fees for all consumers. Refund checks shall be valid for at least one hundred and2eighty (180) days from mailing. If BAC Home Loans or its successor is notified3that any checks are undeliverable to a borrower, BAC Home Loans or its4successor shall follow the procedures for the delivery of refund checks described5in the Subparagraph I.E.2;62.Made all payments, directly or through its successor, into an interest bearing escrow7account as required by Paragraph III.3 of the Consent Judgment filed in United States v.8Bank of America Corporation, CV 12-00361 (D.D.C.) (attached as Exhibit A); provided,9however, that, if the proposed Consent Judgment filed in United States v. Bank of10America Corporation, CV 12-00361 (D.D.C.), is not approved and ordered by that Court11within ninety (90) days of entry of this Supplemental Order, then the requirement of this12Subparagraph I.D.2 shall not be a necessary condition for BAC Home Loans to satisfy13the Judgment in Paragraph I.A; and143.Complying with the payment requirements of the remediation program administered15pursuant to Paragraphs 16, 19-25 of the Consent Order entered in the matter of United16States v. BAC Home Loans Servicing, CV 11-04534 (C.D. Cal. May 31, 2011) (the17“SCRA Consent Order” attached as Exhibit B).18E.BAC Home Loans provided the FTC with a First Declaration, sworn to under penalty of perjury,19on February 16, 2012 explaining those steps it undertook to comply with Paragraph I.D.201.The First Declaration described in detail BAC Home Loans’ process for the21compensation referenced in Paragraph I.D above, completed through February 1, 201222including, but not limited to:23a.The means used to identify borrowers eligible for a reversal or refund of Fees;24b.The means used to notify borrowers that they were entitled to a reversal or refund2526of Fees, including a sample copy of any notification sent to borrowers;c.The number of loan accounts eligible to receive a reversal or refund of a Fee;27287
Case 2:10-cv-04193-JFW-SS Document 151d.2Filed 03/22/12 Page 8 of 355 Page ID #:1014The number of loan accounts that received a reversal of a Fee and the number thatreceived a refund of a Fee; and3e.4The total dollar amount of Fees identified for reversal and the total amountidentified for refund.52.The First Declaration also certified that BAC Home Loans or its successor followed the6procedures below for the delivery of refund checks:7a.8Mail all refund checks by first class mail to the last known address on the systemof record for each relevant borrower with forwarding service requested;9b.Make each refund check issued valid for at least 180 days from mailing;10c.If any refund check is returned, use the telephone number in the system of record11to contact the borrower and secure a correct address; and12d.If efforts to contact the borrower by phone are unsuccessful, after 180 days from13the date the check was issued, turn over the unclaimed funds to the escheatment14process in compliance with applicable state laws and regulations regarding15unclaimed property.163.The First Declaration also provided documentation in an electronic format specified by17the FTC for all compensation reversals or refunds, completed through February 1, 2012,18which was sufficient to identify for each reversal or refund:19a.the loan number for the loan assessed the Fee;20b.the type of Fee;21c.the amount of Fee; and22d.the total amount reversed and the total amount refunded.234.242526The FTC has accepted this First Declaration as satisfying the requirements of thisParagraph I.E.F.Within one hundred and eighty (180) days from entry of this Supplemental Order, BAC HomeLoans shall provide to the FTC a Second Declaration, sworn to under penalty of perjury,27288
Case 2:10-cv-04193-JFW-SS Document 15Filed 03/22/12 Page 9 of 355 Page ID #:10151confirming that:21.The reversal and refund process described in the First Declaration has been completed;32.BAC Home Loans or its successor followed the procedures described in Subparagraph4I.E.2 for the delivery of refund checks;53.All payments into an interest bearing escrow account as required by Paragraph III.3 of6the Consent Judgment filed in United States v. Bank of America Corporation, CV 12-700361 (D.D.C.), have been made on behalf of Bank of America Corporation; provided,8however, that, if the proposed Consent Judgment filed in United States v. Bank of9America Corporation, CV 12-00361 (D.D.C.), is not approved and ordered by that Court10within ninety (90) days of entry of this Supplemental Order, then the Second Declaration11required by this Paragraph I.F need not include the confirmation called for in this12Subparagraph I.F.3; and134.BAC Home Loans or its successor has complied with all payment requirements due as of14the date of the Second Declaration for the remediation program administered pursuant to15Paragraphs 16, 19-25 of the SCRA Consent Order.16G.After submission of the Second Declaration described in Paragraph I.F, only with respect to17remediation completed after February 1, 2012, BAC Home Loans must provide upon written18request from the FTC, as needed to determine compliance with the Supplemental Order,19documentation for specific payments identified by the FTC, or a random sampling of payments20chosen by the FTC. Such documentation must be provided in an electronic format specified by21the FTC and within thirty (30) days of receipt of the FTC’s written notice. The documentation22must be sufficient to identify for each payment:231.the loan number for the loan assessed the Fee;242.the type of Fee;253.the amount of Fee; and264.the total amount reversed or refunded.27289
Case 2:10-cv-04193-JFW-SS Document 15 Filed 03/22/12 Page 10 of 355 Page ID#:10161H.After providing the Second Declaration required by Paragraph I.F, within one (1) year after entry2of this Supplemental Order, BAC Home Loans shall move the Court for an order: (a) certifying3that BAC Home Loans has complied with Paragraphs I.D, I.E, I.F, and I.G; and (b) terminating4the Consent Order as to BAC Home Loans and this Supplemental Order. In moving for such an5order, BAC Home Loans must demonstrate that it has met all of the conditions of Paragraph I.D,6including, but not limited to, reversing or refunding all prohibited Fees for all consumers and7making all payments required by the Consent Judgment filed in United States v. Bank of America8Corporation, CV 12-00361 (D.D.C.), and by the SCRA Consent Order; provided, however, that9if the proposed Consent Judgment filed in United States v. Bank of America Corporation, CV 12-1000361 (D.D.C.) is not approved and ordered by that Court within ninety (90) days of entry of this11Supplemental Order, then payments under the proposed Consent Judgment filed in United States12v. Bank of America Corporation, CV 12-00361 (D.D.C.), are not required under this13Supplemental Order. The FTC shall have 30 days to object to the motion and submit a14memorandum explaining why the order should not be issued.15I.In addition to the judgment entered pursuant to Paragraph I.A of this Supplemental Order,16judgment is entered against BAC Home Loans in the amount of one hundred and thirty thousand17dollars ( 130,000.00), to be paid by and through Bank of America Corporation, to compensate18for BAC Home Loans’ violations of Paragraph XIV of the Consent Order. On or before five (5)19business days after the date of entry of this Supplemental Order, BAC Home Loans, by and20through Bank of America Corporation, shall wire transfer the sum of one hundred and thirty21thousand dollars ( 130,000.00) to the Commission or such agent as the Commission may direct,22pursuant to the instructions provided by the Commission. All funds paid pursuant to this23Supplemental Order shall be deposited into a fund administered by the Commission or its agent24to be used to compensate consumers for injury associated with violations of Paragraph XIV of25the Consent Order. In the event that direct redress to consumers is wholly or partially26impracticable or funds remain after redress is completed, any remaining funds shall be deposited272810
Case 2:10-cv-04193-JFW-SS Document 15 Filed 03/22/12 Page 11 of 355 Page ID#:10171as equitable disgorgement into the United States Treasury. BAC Home Loans shall have no right2to challenge the FTC’s choice of remedies under this Paragraph.3II. RETENTION OF JURISDICTION4(Supersedes Paragraph XX of the Consent Order)5IT IS FURTHER ORDERED that this Court shall retain jurisdiction of this matter for purposes6of construction, modification, and enforcement of the Consent Order and this Supplemental Order.7IT IS SO ORDERED.8910March 22, 2012DATED:UNITED STATES DISTRICT JUDGE11121314151617181920212223242526272811
Case 2:10-cv-04193-JFW-SS Document 15 Filed 03/22/12 Page 12 of 355 Page ID#:10181APPROVED AS TO FORM AND CONTENT:234FEDERAL TRADE COMMISSION567WILLARD K. TOMGeneral Counsel89101112131415John . Jacobs (Loc Counsel)JJaco @ftc.govCalifornia Bar No. 134154Federal Trade Commission10877 Wilshire Blvd., Ste. 700Los Angeles, CA 90024Tel: (310) 824-4343Fax: (310) 824-4380Attorney for PlaintiffFederal Trade Commission16171819AMANDA C. BASTAMATTHEW J. WILSHIREabasta@ftc.gov, mwilshire@ftc.govFederal Trade Commission600 Pennsylvania AvenueWashington, D.C. 20580Tel: (202) 326-2340 (Basta); (202) 326-2976 (Wilshire)Fax: (202) 326-2558'c20212223Of CounselFederal Trade CommissionDated: .11, 201224252627?R12
Case 2:10-cv-04193-JFW-SS Document 15 Filed 03/22/12 Page 13 of 355 Page ID#:101923DEFENDANTS45678911 -L4 -10\I1213: JEF G:f 17PETER M. TODAROKing & Spalding LLP1700 Pennsylvan ia Avenue, NW, Suite 2001819Washington, DC 20006-4706Tel: (202) 737-0500Fax: (202) 626-373720 jspigel@kslaw.comAttorneys for Defendants212223Dated: March- ")20122425262713
Case 2:10-cv-04193-JFW-SSCase 1:12-cv-00361-RMCDocumentDocument15 1-4FiledFiled03/22/1203/12/12PagePage14 of1355of 317Page ID#:1020IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIAUNITED STATES OF AMERICA,et al.,Plaintiffs,v.BANK OF AMERICA CORP. et al.,Defendants.)))))))))))))))))Civil Action No.CONSENT JUDGMENTWHEREAS, Plaintiffs, the United States of America and the States of Alabama, Alaska,Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii,Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota,Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico,New York, North Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, SouthDakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, Wyoming,the Commonwealths of Kentucky, Massachusetts, Pennsylvania and Virginia, and the District ofColumbia filed their complaint on March 12, 2012, alleging that Bank of America Corporation,Bank of America, N.A., BAC Home Loans Servicing, LP f/k/a Countrywide Home LoansServicing, LP, Countrywide Home Loans, Inc., Countrywide Financial Corporation,Countrywide Mortgage Ventures, LLC, and Countrywide Bank, FSB (collectively, for the sakeExhibit APage 14
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