Bear Stearns & Co. — remember them? — was forced into a fire sale to JP Morgan Chase last March because of its heavy investment in mortgage securities. Now its mortgage billing practices have cost it a heavy fine.
The Federal Trade Commission said today that Bear and its EMC Mortgage Corp. subsidiary have agreed to pay $28 million to settle a FTC lawsuit that accused them of unfair billing practices. The FTC charged that Bear and EMC misrepresented what its customers owed and collected unauthorized fees. They also allegedly violated credit-reporting rules by turning over customers’ names and payment histories to credit agencies without disclosing that some of the amounts were disputed.
Bear and EMC were big holders of subprime and Alt-A loans. The FTC says that as of a year ago EMC, Bear’s mortgage servicing arm, held more than 475,000 mortgages with an unpaid balance of $80 billion.
You can read the FTC complaint here and the settlement here.
Bear Stearns did not admit any wrongdoing in the settlement and JP Morgan declined to comment, according to Reuters.
Here’s more on the Bear saga and its ties to Orange County…