Mortgages deserve a close eye

Unfair late fees. Mysterious charges on bills. Objections that seem to fall on deaf ears.
It's a litany of complaints familiar to many who have argued over bills for anything from cable television to credit cards to cell-phone service.
But two factors distinguish the case of "United States of America vs. Fairbanks Capital Corp. from the usual run of consumer griping:
One is that its customers never chose to do business with Fairbanks.
The other is that more than money was at stake. People's homes were on the line.
Fairbanks, of Salt Lake City, is a mortgage-loan service company, a kind of business that homeowners rarely even notice.
Years of havoc
But it wreaked havoc with thousands of lives over the last several years, according to federal officials who investigated Fairbanks and announced this month that the company would pay $40 million in restitution to settle accusations against it.
Although Fairbanks admitted no wrongdoing, its accusers pulled no punches. Timothy Muris, chairman of the Federal Trade Commission, said Fairbanks used "unscrupulous tactics to victimize unsuspecting borrowers. Many consumers were forced to pay hundreds of dollars in phony charges or face possible foreclosure of their loans and loss of their homes."
It's not clear how many borrowers suffered from these bogus charges, which showed up as fees for services such as "property inspection" or "broker's price opinion."
There's no question that thousands were at risk. Fairbanks services half a million mortgages nationally, according to the Department of Housing and Urban Development, which sued Fairbanks jointly with the FTC. The company's name shows up frequently in Philadelphia foreclosure proceedings.
Untangling some of these cases could take months, and borrowers may never be made whole for their monetary losses, let alone for their lost time, anxiety and damage to their credit ratings.
One case
Consider the predicament of Shirley Green, a Cape May County, Pa., woman who faces a foreclosure hearing in January on four rental properties that she and her husband consider their retirement nest egg.
The Greens aren't sure how they ended up dealing with Fairbanks, which specializes in servicing loans classified as "subprime." Subprime loans are made at higher interest rates to borrowers with imperfect credit histories.
What Shirley Green does know is that mysterious charges started showing up on her mortgage statements -- for items such as "property preservation" and "broker's price opinion" -- and that Fairbanks eventually claimed she was in default because of them.
"This whole thing is like a nightmare," Shirley Green, 58, says.
Green at first tried to represent herself -- a mistake, she realizes. But she was confident that she was keeping up with her payments, and believed that all she needed to do was show the evidence to a judge. As a businesswoman, she knows how to keep records.
Green's experience, and the case against Fairbanks, illustrates a crucial thing to remember about mortgage loans: With your home on the line, you can't just treat these like any other bills.
No control
Nor do you have control over whom you'll be dealing with. Mortgages frequently change hands, and lenders often contract with companies such as Fairbanks to service them.
That's why it's important for regulators to keep watch for unscrupulous tactics.
For a great new booklet that includes sample complaint letters to lenders, "Mortgage Servicing: Making Sure Your Payments Count," see www.ftc.gov/bcp/conline/pubs/homes/mortgserv.htm or call the FTC at (877) 382-4357.
For information about the Fairbanks settlement, call (877) 862-0886.
XJeff Gelles is a columnist for The Philadelphia Inquirer. Write to him at: The Philadelphia Inquirer, P.O. Box 8263, Philadelphia, Pa. 19101 or e-mail consumerwatch@phillynews.com.