Clipping Homeowners For Improper, Unexplained Fees A Common Practice For Some In Mortgage Servicing Industry

In St. Cloud, Minnesota, the St. Cloud Times reports:

• Charging improper or unexplained fees is a common practice for some mortgage servicing companies and is a larger part of the national foreclosure crisis than most people realize, experts say. Questionable property inspections, late fees when payments aren’t late, forcing homeowners to buy insurance even when they already have it — all occur nationwide and often go unchallenged by consumers, they say.

• “It’s really a major problem, and it’s been around for a long time,” said O. Max Gardner III, a North Carolina attorney who teaches bankruptcy boot camps for other lawyers.

• A mortgage servicer is responsible for collecting monthly loan payments and crediting the homeowner’s account. The servicer also handles escrow accounts for taxes and insurance. The servicing companies don’t actually own the loan, so they may not have a strong interest in providing good customer service. In fact, they may have an incentive to force a homeowner into foreclosure. “The more defaults they have, the more fees they collect, the more money they make,” said David P. Leibowitz, a Chicago-based foreclosure defense attorney.

For more, see Experts: Improper fees play part in crisis (Servicers may benefit from loans in default).

In a related story, see Couple blames fees in loss of home (Residents say dream of raising a family in their first home drowned in a flood of questionable mortgage charges).

For earlier posts on the alleged mortgage servicing practice of padding fees with phony charges, see:

• Countrywide Padded Legal, Other Fees When Servicing Mortgages, Says Suit; Class Action Status Sought,
• Wall Street Journal On Investigations Of Possible Phony Claims By Mortgage Servicers & Lenders In Homeowners' Bankruptcy Cases,
• Homeowners In Foreclosure Being Clipped For Illegally Inflated Legal & Appraisal Fees, Says Lawsuit.

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