WASHINGTON -- Bank of America will pay $108 million to settle federal charges that Countrywide Financial Corp., which it acquired nearly two years ago, collected outsized fees from borrowers facing foreclosure.

It's the latest evidence of misconduct at Countrywide, once an industry giant that has since fallen. Last year, three top executives, including former CEO Angelo Mozilo, were charged with civil fraud and insider trading by the Securities and Exchange Commission.

The settlement, which seeks to refund money to about 200,000 borrowers, was announced Monday by the Federal Trade Commission. It is the largest mortgage industry settlement for the agency, which oversees non-banking functions such as debt collection.

The FTC's chairman, Jon Leibowitz, accused Countrywide of "callous conduct, which took advantage of consumers already at the end of their financial rope."

Bank of America purchased Countrywide in July 2008. The actions in the case took place before the acquisition.

The Charlotte-based bank, which did not admit or deny the charges, said it agreed to the settlement "to avoid the expense and distraction associated with litigating the case."

Countrywide hit borrowers who were behind on their mortgages with fees of several thousand dollars at times, the FTC said. The fees were for such services as property inspections and landscaping that far exceeded market rates. Countrywide created subsidiaries to hire vendors, which marked up the price for such services, the agency said.

"Countrywide profited from making risky loans to homeowners during the boom years, and then they profited again when the loans failed," Leibowitz said.

It will take several months to contact the affected borrowers, Leibowitz said. He called Countrywide's record-keeping "beyond abysmal."

Banks have not done enough to prevent foreclosures because of the income they receive from these sort of fees, consumer advocates allege. In a 2007 conference call with investors that was cited by FTC lawyers, a top Countrywide executive called such fees "part of our diversification strategy" as foreclosures soared.

"This is an ongoing problem," said Diane Thompson, a lawyer with the National Consumer Law Center. "Those default fees are huge barriers to loan modifications."

The FTC also alleged that Countrywide made false claims to borrowers in bankruptcy about the amount owed or the size of their loans -- and failed to tell them about fees or other charges. The settlement requires Bank of America to give bankrupt borrowers monthly notices about what they owe.