Bear Stearns & EMC Agree to Pay $28 Million in Settlement

September 9, 2008

Former financial giant Bear Stearns and its subsidiary loan servicer EMC have agreed to pay $28 million to settle Federal Trade Commission charges of unlawful loan servicing. 

The FTC complaint charges Bear Stearns and EMC with unfair and deceptive loan servicing practices.  The companies are accused of misrepresenting the amounts borrowers owed, charging unauthorized fees like late fees, property inspection fees, and loan modification fees.  They are also accused of engaging in unlawful and abusive collection practices.

Hundreds of borrowers have shared their stories of how they say EMC mishandled their mortgages.  Here are some of their complaints.

The Consumer Warning Network has interviewed several former EMC employees who have come forward to expose many of the same loan servicing practices described in the FTC complaint.  Here are some of the practices they saw while working at loan servicer EMC.

EMC’s loan servicing portfolio grew exponentially during the mortgage boom.  The FTC says as of September 2007 the company serviced nearly half a million loans with a total unpaid balance of about $80 billion.

In March 2008, the federal government teamed up with JP Morgan Chase to bail out Bear Stearns as it faced a liquidity crisis, caused by the subprime meltdown.  The company still could not be saved and was taken over by JP Morgan in May.  Bear Stearns was one of the largest global investment firms in the world prior to its collapse.

Under the settlement, announced by the FTC, Bear Stearns and EMC will stop the alleged illegal practices and institute a special program to ensure the accuracy of borrower information.

If the court approves the settlement, consumers who are eligible for restitution will be contacted by mail.