I-Team

I-Team: Mortgage-Servicing Companies

(WBZ) This is an I-Team investigation that every property owner should read or watch. The focus: mortgage-servicing companies. These are the firms that lenders choose to handle your mortgage payments.

The problem is that hundreds of homeowners believe some of these companies are trying to take their homes away. I-Team reporter Joe Bergantino has what you need to know to protect yourself.

Lynda Allen has a special attachment to this land and home in Harwich.

Lynda Allen, Homeowner:
"We were raised on this property, as a kid, my life is here. My Mom and my Dad are here. Our family is here. I have a right to stay here."

But this mortgage servicing company, Litton Loan, where Lynda sends her mortgage payments, is trying to take her home away.

Lynda fell behind in her mortgage. Her calculation--

"I, at best, was behind two months in my mortgage that I could calculate."

About 65-hundred dollars. But Litton came up with a different number: 33 thousand dollars.

"I was stunned. How in the world can that possibly be?"

Litton's message to Lynda...

"Either we come up with the 33 thousand dollars or, guess what, you're going to lose your home."

Lynda Allen ended up filing for bankruptcy to save her home. And she's still trying to find out how Litton came up with her owing 33-thousand dollars.

An isolated case? No.

Litton is the subject of a long list of consumer complaints alleging deception and fraud. The Better Business Bureau ranks Litton unsatisfactory. At least two law firms are considering filing class action lawsuits against the company.

And Litton isn't the only mortgage servicing company being accused of forcing homeowners into foreclosure.

Joe Bergantino:
"How big of a problem is it?"

Marie McDonnell, Mortgage analyst:
"It is absolutely huge."

Example: the Federal Trade Commission charged Fairbanks Capital Corp. with defrauding 280-thousand homeowners. The company paid out a settlement of 40 million dollars and changed its name.

Joel Winston, Federal Trade Commission:
"Fairbanks engaged in fraud in a number of ways to extract additional payments from consumers."

Mike Dillon says he's been living that nightmare for two years. He's gone to court to stop Fairbanks' attempt to foreclose on the house he owns in Manchester, New Hampshire.

Mike Dillon, Homeowner:
"As far as my records reflect, I was current when they started foreclosure. It looked like they were trying to steal the house."

Joe Bergantino:
"And you believe that?"

Mike Dillon:
"Yes I do. Yes I do."

Roy Tilsley, Mike Dillon's attorney:
"They were creating a situation where Mr. Dylan would appear to be behind despite the fact that he made the appropriate payments at the appropriate time."

So why is this happening? Why, in this hot real estate market, are some mortgage servicing companies eager to foreclose on homeowners?

Gary Klein, Attorney:
"They're looking for opportunities to charge fees that will increase their profits."

In Lynda Allen's case, Marie McDonnell, who's working with Allen's lawyer, analyzed Lynda's mortgage and found Litton Loan had misapplied about 13,000 dollars of her payments. Litton bought home insurance Lynda already had and opened an escrow account without her permission.

On Litton's books, that 13 thousand dollars put Lynda much further behind than she was.

Marie McDonnell:
"That sets up a whole series of events that can be a runaway train."

For Lynda, it was a foreclosure notice that she's still battling.

"I'm not going. I will continue to fight and do whatever I need to do in order to maintain my home."

Litton Loan says it did not misapply any of Lynda Allen's funds. Litton's president told us his company has never done that and never will.

Fairbanks, now called Select Portfolio Servicing, has argued in court that it has legitimate claims against Mike Dillon.

So how can homeowners protect themselves? Read your mortgage statements carefully and if you run into trouble, fix it quickly. If you believe your servicing company is cheating you, complain to the State Division of Banks or the Federal Trade Commission.

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