Uncovering practices used by servicers to over charge customers

Servicers: no better than banks as they skim funds and over charge clients.

The assets are being picked up for pennies on the dollar yet servicers still refuse to negotiate write downs as they line their pockets with fraudulent fees from bogus charges.



From NYT Dec 18, 2010
Original Article by Gretchen Morgenson at the NYT
find the complete article here:  Uncovering truth about mortgage servicers
“A servicer might, for example, deny a loan modification to a borrower because it also owns a second mortgage on the same property and doesn’t want to write down that asset, as required in a modification. Levying outsize default fees is another tactic — the fees typically go to the servicer, not the lender, but they can still propel a property into foreclosure more quickly. And foreclosures aren’t a good outcome for investors. “
Case reveals practices, more may follow:

Morgenson continues:

“Last week, a jury in federal district court in Reno, Nev., awarded a group of 50 mortgage investors $5.1 million in punitive damages against defendants in a loan servicing case. Although the numbers in the case aren’t large, its facts are fascinating. Indeed, the case exposed some of the tricks of the servicers’ trade.

The case is also notable because the main defendant, Silar Advisors, was one of the institutions that struck a deal in 2009 with the Federal Deposit Insurance Corporation to buy the assets of a notorious failed bank, IndyMac.

Of the $5.1 million in damages awarded in the case, Silar must pay $3 million.

John W. Bickel II, a co-founder of Bickel & Brewer in Dallas, represented the investors in the case. Because he represents an additional 1,450 investors whose loans were serviced by Silar, he said more suits like this one would follow soon.

At the same time, court papers show, Compass/Silar quietly took in almost $860,000 in late fees, default interest and other costs from the Standard Property borrower. This ran afoul of the servicing agreement governing the Standard Property mortgage. The agreement stated that such fees could go to the servicer only after investors had been paid principal and accrued interest on a loan. “

Raising the drawbridge against fraud; lenders and servicers are taking the battle against mortgage fraud to a new level. The trick is finding really good ... story): An article from: Mortgage Banking

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