Another predatory mortgage servicing story --another case for a CFPA

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Another desperate homeowner caught up in a series of reckless mortgage servicing practices and costly battles to right a corporate wrong. The below email comes from a couple who find themselves at their wits end after futile and exhaustive attempts to have their mortgage servicing company stop over-charging them for unnecessary forced place insurance, stop pyramiding undue late fees and stop destroying their credit.

Like many consumers who feel trapped by circumstances they didn't create, they hope that  by sharing their story, someone will step up to help stop an ongoing mortgage servicing nightmare -- they can't wake up from. 

With their permission -here's their story-- in their own words;  

Dear Denise:

Below is a letter I drafted to my Representative Dennis Wood January 22, 2009.   I have sent it to Roy Bunt's office, Claire McCaskill, & both Mick Campbell & Rich Weaver in the Division of Finance with the State as well as filed a lengthy complaint with the State's Attorney General's office. 

I recently received a reply from Chris Koster Via Kim R. Hoelscher Complaint Investigator that simply stated that the company will not provide any relief as requested.  And after careful consideration a determination had been made that further state action is not appropriate at this time. They iterated that their correspondence did not mean our claim was without merit, & they suggested we retain a private attorney regarding the matter. They will continue to monitor the company and should they see any patterns develop with MO consumers they would refer to my file. I would appreciate any assistance or direction you could point us.

I am writing you this letter in hopes you may be able to assist our family.  I was inspired last evening while watching a national news program that featured Congresswoman Maxine Waters (D-Ca.). She was attempting to navigate resolution of a problem on behalf of her constituent through a mortgage lenders servicing company.  Our family is facing a situation much like that of the constituent in the news piece.

Let me give you some background:  I grew up in Taney Co, my husband in Stone CO, both since we could walk.  My husband has been with a local company for nearly 16 years (next month) and I work for my dad who has been in the Branson entertainment industry since the 70's. We are a very hardworking, dedicated to the Lord average MO family.  We still have 2 daughters at home ages 17 & 12. We also serve as Children's Ministry Coordinators & Youth Leaders for our home church. 

 My husband built this home for our family in 1996.  It was his drafting final in high school.  We moved in, in 1997.  In 2004 refinanced our home through a mortgage broker. Our loan initially was with AIG, was then sold to Equity one, then sold to Banco Popular Mortgage Servicing, then most recently sold to Litton Loan servicing.  We feel we have been scammed by the mortgage servicers by them placing on our Mortgage a forced insurance policy as though we did not have homeowners insurance.   Here is exactly what we have been experiencing as explained in an article online by brought to you by The Debt Advocacy Center under the topic of Mortgage Servicing Company Fraud to which the link online is:                 

Nick In foreclosure scams writes: "Possibly the most common scam that we have witnessed is when the lender places a forced insurance policy on a property. They claim they have not received proof of insurance and then force the owners to pay extra every month for the policy.

Often, they place the insurance without informing the homeowners, who make their regular monthly payment, which is first applied to the policy and then to interest and principal. This makes them late on the bill even though they are paying on time every month. Faxes to the lender of proof of insurance will not convince them, if they confirm receiving the documents at all. Homeowners may only learn of the insurance policy when they are being sued for foreclosure, and assume that a horrible mistake had been made. "

This is exactly what we have experienced.  We have been with the same Insurance Company, American Family there in Branson West for years, have never lapsed our coverage, and have always had a comprehensive homeowner's policy. Even increasing some of our coverage's in that policy at the mortgage lenders request. 

We caught them in this "in our opinion" scam over a year ago and after numerous calls, hours on hold they sent us a check to reimburse part of one year's forced placed insurance but failed to indicate in their "system" specifically why the sent us a check for over $700.00 and the next month began the forced placed (in our opinion) scam all over.  Every month the payment is received on time, they reduce the amount that is applied to our principal and take the skimmed money & apply it to insurance and then hit the principal again reducing the payment for a late fee of nearly $50.00 every month.

Even though in reality it is not late but because of their scam it makes the payment to the principal look like the payment is not paid in full.  As well as a false appearance of delinquency.   This is referred to as Pyramiding Late Fees.  Pyramiding late fees refers to applying payments first to late fees and past due amounts, and then charging additional late fees on the current payment.

This action results in late fees and interest being applied to an account over and over again, despite previous late fees having been assessed on a particular payment already. According to the Federal Trade Commission, pyramiding of late fees is unfair to consumers.

They have reported to the credit bureaus that we are months behind, which we are not. We have faxed to the former lender & the current lender numerous times proof of our mortgage payments inclusive of copies of our bank statements where they deducted the full mortgage payment on time.  Our insurance company has given them information numerous times regarding our policy; we have given them the same over and over.    The current lender will not correct the complaint because when it sold from Banco Popular to Litton it came over from them at that status & they can't change it. We were told by them we would have to get PMSI to fix it in their system then get them the information.  We have spent numerous hours numerous days attempting to resolve the issue via phone to no avail. We get transferred; hung up on, different stories from every customer service/ loan resolution agent etc.  There is no physical office we can go into & look someone in the eye until it's fixed.   So until it is resolved all of our payments are not being applied correctly thus sending our mortgage into what appears to be at a near foreclosed tailspin state even though we pay it in full on time every month.  

We respectfully request to you at the" end of our rope" state for your assistance or at least attention to this matter.  This has been very stressful on our family and has hindered our ability to obtain loans whether for vehicle, small business, refinance, etc.  We do not have the capitol to retain an expensive attorney to even begin to attempt resolution. 

We appreciate greatly your time & service to our county and will await your reply.


The Partons

If anyone would like to speak with these homeowners, email me and I will put you in touch with them.. 

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As a former federal prosecutor, I thoroughly enjoyed reading your blog which contains useful information for all consumers. Thank you for your hard work in sharing this important information with everyone "out there!"

Richard -Thanks for the kind words -they are much appreciated!

A few helpful sites for the Parton family and those with the same circumstances

we should keep a running list of sites that can help including legal sites. Any others?

Richard - as a former federal prosecutor, would you have any advice as to whom one can speak with if the AUSA in your state is refusing to examine potential criminal violations like mail and wire fraud? Please feel free to contact me directly if you would rather if you have any suggestions...

Hmmm... Stark v. EMC was decided in MO if I remember correctly. Might not be a bad place to start - track down the attorney that represented the Starks and/or the arbitrator that decided the case. If either still exists, see if they might have any referrals... has 3 federal cases in MO against Litton on file at the moment. I'd be willing to bet that there are more at the state level as well. The Partons could always call the courthouse, give the clerk the docket #s and ask who the attorneys are that are representing the plaintiffs. Of course, with no offense to the specific attorneys, that doesn't always mean that you'll find an attorney that understands Mortgage Servicing Fraud - which is what it sounds like the Partons are dealing with. I'm not totally familiar with the company but this sounds like a classic Fairbanks/Select Portfolio Servicing case and I am familiar with the problems that many Litton victims have had with the company.

I've got a couple of suggestions for the Partons but I'd rather not telegraph them out here because I'm sure that Litton, their legal counsel, the USFN, the AFN, and everyone else will be reading this. If they'd like, the Partons are more than welcome to contact me directly or, if you'd rather, Ms. Richardson, feel free to forward my contact information to them. I can't guarantee anything but I can at least give them a couple of options.

Mike Dillon
Manchester, NH

We also are in this situation with a predatory loan servicing agent. My advise, do not negotiate over the phone, do it in writing certified letters only. If you do get phone calls, ask for the agent's name, employee # and docuemtn the date and time of the calls, ask for the information in writing. Contact the Consumer Financial Protection Bureau, the FTC and your local Atty General for your state and make a formal written complaint to all three parties. Do not give up hope, be polite and professional, good does triumph over evil with God's help.

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