Bear to Pay Million to Settle Loan Complaint NYTimes.com

The Bear Stearns Companies and its mortgage servicing unit agreed to pay million to settle federal charges it had deceived subprime borrowers and had engaged in abusive loan practices before the investment bank’s collapse.

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The Federal Trade Commission said that Bear Stearns, acquired May 30 by JPMorgan Chase in a bailout orchestrated by the Federal Reserve, and its EMC Mortgage Corporation unit had violated consumer lending laws.

The companies imposed unauthorized charges such as fees for late payments, property inspections and loan modifications, the commission said. The companies are also accused of misrepresenting to borrowers what they owed on mortgages.

Many of the loans acquired by Bear Stearns and EMC were subprime mortgages, including interest-only loans, and some were made with little or no documentation of the borrowers’ income, the F.T.C. said. As of last September, EMC serviced more than 475,000 mortgage loans that had an unpaid balance of billion, the agency said.

The commission said the practices had occurred before JPMorgan acquired Bear Stearns for .3 billion. Bear Stearns, once the fifth largest securities firm in the nation, was forced to sell after its collapse during the credit crisis.

A JPMorgan spokesman, Joseph Evangelisti, declined to comment on the settlement.

The million payment will help consumers who were injured by the illegal conduct, the F.T.C. said. The company also agreed to obey all relevant laws, including the Truth in Lending Act.

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