Mortgage servicers, who collect monthly payments on home loans, are allowed to charge homeowners for items such as property inspections, lawn mowing and other services designed to protect the lender’s financial interest in the property, the FTC said.  But as the housing market collapsed, Countrywide created subsidiaries to do the work, then marked up the price of those services by 100% or more, charging homeowners the fees to increase profits from default-related services in bad economic times, the FTC said.  “Life is hard enough for homeowners who are having trouble paying their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible,” FTC Chairman Jon Leibowitz said.

Countrywide also failed to tell borrowers when it added new charges to their home loans and made “false or unsupported claims” to borrowers about the how much they owed on their loans, the agency said. The marked-up fees were collected as part of repayment plans, mortgage modifications, foreclosures or bankruptcies.  The settlement creates a $108-million fund to provide refunds to homeowners who were overcharged before July 2008, when the company was bought by Bank of America.

Bank of America agreed to settle the charges “to avoid the expense and distraction associated with litigating the case,” it said in a statement. The settlement involved no admission of wrongdoing, BofA said. The settlement requires the company to stop the practices.  Once the court approves the settlement, the FTC said it would notify eligible homeowners in a process that could take several months. The agency has a website with more information, at the FTC website.

One reason is that figuring out whether to stay or walk requires calculations too complicated and time consuming for the average homeowner to perform. For those who don’t want to do the calculations themselves, the online “Does It Make Financial Sense To Walk Away & Rent?” The calculator at YouWalkAway.com can help.

Just enter in your home’s value, what rent you would pay for a comparable home, your annual mortgage tax savings, your housing debt and mortgage interest only payment, how long you plan to stay in your home and expected depreciation or appreciation of your home, among other figures. To estimate your home’s value, the site Zillow.com and this Home Price Calculator can help. To estimate depreciation or appreciation, the average of how much your property would go up or down over the designated years you would plan on staying in the home, you may want to stick with the historical appreciation rate of around 3 to 4 %, Professor White said.  The calculator will then tell you how much you’ll save or lose by walking away. You’ll need to decide whether the savings, if any, are worth walking away. In making your decision, you may also want to consider foreclosure costs and the impact on your credit as well as other factors in the equation.

According to Professor White, even if it would make financial sense to walk away, many people don’t because of emotional constraints, including the desire to avoid shame and guilt as well as an exaggerated fear of the consequences of foreclosure — emotions encouraged by everyone from the government to the media. “This moral norm is perpetuated by all kind of institutions and individuals,” Professor White said. How much would you save or loss if you walked away? Will you stay or walk?  Article was written by JENNIFER SARANOW SCHULTZ