Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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'Terror tactics' over tax bills: Pappas

February 8, 2008

Cook County Treasurer Maria Pappas wants loan officials for Countrywide Financial to "go back to California and smoke whatever it is they smoke out there."

The giant mortgage lender has sent 80,000 letters to its client homeowners in Cook County, threatening to charge each of them a $5 fee if they fail to immediately mail a copy of their property tax bill to Countrywide's office in California.

"You don't need to send anybody a duplicate bill," Pappas said when asked for her advice to homeowners.

"Under Illinois law, these guys can collect thousands of dollars in an escrow account (for property tax payments), collect interest on it without giving the homeowner a penny, and they don't want to pay a lousy $5 for an electronic copy of a property tax bill," Pappas said.

"They're using terror tactics on little old ladies. They should be ashamed of themselves."

Mortgage lenders last fall declared war on Cook County when Pappas announced that her office would charge them $5 for an electronic copy of the property tax bill that it had previously provided free of charge.

Homeowners then began receiving letters from a variety of mortgage companies that stated if the taxpayer didn't immediately mail his property tax bill to the lending institution, the homeowner not only would be liable for a $5 fee but also penalties due to late payment of the tax bill.

Pappas denounced the tactic, called the mortgage lenders into her office for a meeting, and they agreed to rescind the letters and cease pestering homeowners.

But when Pappas mailed out the latest round of property tax bills in the last week, Countrywide and some smaller loan companies again sent the threatening letters, and Pappas' office was bombarded with phone calls from angry taxpayers.

"These firms know they are not entitled to the original property tax bill before making payments out of the escrow accounts, and they know that federal law requires them to pay the taxes on time," Pappas said.

Pappas said if late fees are assessed because of late payment, the lenders holding the escrow accounts are responsible.

In a statement released to the news media, she went on to say, "These are terror tactics to stampede customers," and she called on Bank of America, which has announced its intention to purchase Countrywide, to back out of the deal.

Beside Countrywide, firms sending out the threatening letters include Aurora Loan Services LLC, Bank Financial, EverHome, First Horizon, Flagstar, Liberty Lending, Nationstar, OCWEN Loan Servicing, Residential Credit Solutions, Regions Mortgage, Saxon Mortgage, TCF Bank and West Star, according to the treasurer's office.

Countrywide is one of several large financial institutions that have taken a bath in the subprime loan market.

Officials from Countrywide failed to return a telephone call seeking comment about Pappas' statement on Thursday.

Pappas said mortgage lenders make about 600,000 payments per Cook County property tax installment without the original bill.

"If these people don't want to do business in Cook County, they should get out and move back to California," Pappas said. "We don't want people here who threaten homeowners when they know it is the lending institution's responsibility to pay the tax bill."

I asked Pappas why she thought Countrywide has gone back on its promise from last fall not to send such threats to homeowners.

"They just don't care," she said. "They're going to do what they're going to do, even if they know it is wrong and violates the federal law."

When I asked the lenders about this situation last fall, some of them said that a $5 fee may not seem like much, but that if every state in the nation started charging such fees, the expenses would run into the millions of dollars.

Pappas is one of the first treasurers in the country to charge lenders for this government service, and they apparently want to stop the precedent before it becomes common practice.

Pappas doesn't see why the government should provide such a service to a private company at taxpayer expense.

And, as she points out, the lenders are making more than $5 a year per account by earning interest on the escrow money.

"It just makes me sick when I see these guys doing this kind of thing," Pappas said. "It's just wrong."

Phil Kadner can be reached at or (708) 633-6787.,020808Kadner.article


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Here in Illinois we can get arrested for smoking a cigarette in a restaurant yet these people are disobeying FEDERAL LAW and all they are getting is a slap on the wrist. Once again only the little people are paying. They steal from us and give to the rich politicians and lawyers.

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Now homeowners in Cook County have to watch their monthly statements to see if that extra 5$ shows up in them. If it does and they a.) simply don't notice it or b.) catch it and refuse to pay it since it's then become a part of their payment history there is an opening for the servicers to create a default and start the MSF process up on 80,000 homeowners. People in Cook county might potentially - eventually - lose their homes because of a lousy $5 that the servicer doesn't want to pay.

I fully realize that we're talking another $400k in expenses between all servicers here. But that's life in the aluminum siding business....Ms. Pappas may very well deserve a phone call or letter in thanks of keeping an eye out for homeowners in Cook County and at the same time warn her of the potential of MSF beginning to be implemented against those 80,000...

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as always you're on the ball! You are 100% correct. More payments sent to suspense due to the $5.00 charge, then a late payment fee, then a BPO fee. Then Attorneys fees.

Oh how quickly they can destory a Happy home!

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