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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Taking on an industry
After a mortgage lender tried to foreclose on his home, Michael Dillon made it his mission to set the record straight on his own

Monitor staff
July 15. 2007 12:03AM

Ken Williams / Concord Monitor
Mike Dillon in front of his Manchester home.
Purchase Photos Online

Michael Dillon spends sleepless nights tracking local home foreclosures and studying the way subprime mortgages are packaged, sold and serviced by a web of industry giants all over the country. It is an unlikely hobby for a 38-year-old who doesn't have a college degree, made a living building the stages for acts like the Boston Ballet and Cirque de Soleil, and ran an exotic pet rescue service with his girlfriend on the side.
Those things are almost like another life to him now - before his mortgage company tried to foreclose on his Manchester home even though he says he made the payments he owed, and before he decided to wage his own private war on the subprime mortgage industry.

Now Dillon spends his spare time poring over contracts between mortgage servicers and the holding companies that own the loans, learning the intricacies of the industry most homeowners have never heard of, let alone attempted to understand. He maintains a website about his travails with links to some of his court documents and congressional testimony on subprime lending. It features a photo of himself giving the finger while holding a sign that says: "Save your house? I'm too busy trying to save my own."

He calls his obsession "self-preservation."

"Unless you're in the industry, in some aspect of lending or servicing, you shouldn't have to know what we know," said Dillon, who postponed his wedding and his dream of starting a family to battle his mortgage company in court for the past six years. "You get tired of being up night after night, constantly reading, but then you remember, 'Oh yeah, I didn't do anything wrong,' and you just jump back in it."

Four years ago, Dillon could have been one of 280,000 homeowners nationwide who were part of a class-action lawsuit against his mortgage company, then called Fairbanks Capital Corp. The company was charged by the Federal Trade Commission with making illegal foreclosures, collecting unwarranted fees and other predatory lending practices that resulted in a $40 million settlement.
Mortgage servicing companies like Fairbanks don't own mortgages; they are hired to do the administrative work like collecting payments, sending notices and handling related escrow accounts. In the Fairbanks case, the Federal Trade Commission found that Fairbanks was using its power over people's mortgages to collect extra fees for insurance and late payments that weren't needed.

Homeowners who were part of the class-action suit were entitled to a portion of the $40 million, and their foreclosures were halted. The company was forced to revamp its practices; it has since changed its name to Select Portfolio Services.

Dillon chose to go his own way. By his math, the settlement would have netted him only $143, and it wouldn't have stopped his foreclosure because, on paper, it appeared he was in arrears more than the three-payment limit set by the terms of the settlement.

He brought his own suit against Fairbanks instead, and he is still fighting related companies in court, more than five years since he got his first foreclosure letter from Fairbanks.

The company is committed to clearing its name in Dillon's case. Through its lawyers, Select Portfolio Services says it did not do anything wrong in handling Dillon's loan. It says Dillon owes the company thousands of dollars in unpaid mortgage payments.

But Dillon and his lawyer, former state Consumer Protection Bureau chief Walter Maroney, believe there is a bigger problem at play with the way subprime mortgages like Dillon's are handled by the national companies that package, sell and service them.

A battle begins

Dillon bought his two-story home on Lowell Street in the center of Manchester in 1999 for $65,000. It was a fixer-upper. Dillon planned to use his carpentry skills to renovate and resell it for a profit. Today, the early stacks of construction supplies sit in a front hallway, and his plans of adding French doors and other stylish touches are on hold.

The first signs of trouble for Dillon came in the mail in October 2001 in the form of a letter from Fairbanks Capital Corp. informing him that his mortgage loan was in default. He was puzzled. Dillon had been sending payments each month as required, and he had never heard of Fairbanks before. As far as he knew, his mortgage was through Superior Bank, where he originally went to get his home loan. He later found out that the servicing rights to his mortgage had been sold to Fairbanks. Notification required by the federal government never reached him.

He had sent his September 2001 payment to the wrong company, but he was never notified and assessed a late fee anyway. Dillon was still fighting Fairbanks over the $200 late fee the following year when he fell behind on mortgage payments in February and March. He caught up in May by sending a hefty check to make his loan current again. But then in June 2002, Fairbanks stopped accepting his payments anyway and began the foreclosure process on his property six months later.

The company continued to go ahead with the foreclosure despite Dillon's protests that he was current on his payments. During that time, Dillon says the company made him pay for insurance he already had on the home and harassed him by phone and mail about fees he did not actually owe. To this day, he says he has never received an accurate statement from Fairbanks or Select Portfolio Services about how much he owes and why. The way he sees it, charging fraudulent fees and forcing people into default is part of the company's business plan.

Their battle ended up in Hillsborough Superior Court, where a judge has twice ruled in Dillon's favor. The court ordered Fairbanks to stop its improper foreclosure of Dillon's home and called the company actions in servicing his loan "predatory." In the second ruling, in an order dated August 2006, a judge told the company it would have to come back before the court before it could ever pursue a foreclosure against Dillon again.

This spring, Dillon filed a new lawsuit against Select Portfolio Services and five other national companies that played a role in handling his mortgage. This time, he is seeking damages, and the charges - which include conspiracy and racketeering - are far-reaching.

Maroney and Dillon argue in the suit that Select Portfolio Services engaged in unfair and deceptive servicing practices that resulted in high interest rates, unwarranted penalties, and illegal foreclosures. The other companies, including Merrill Lynch and LeSalle National Bank, were aware of that pattern and failed to do anything about it, they argue.

The case is scheduled to be heard in federal court in Concord next spring.

Lawyers for the companies involved in the suit have denied all the charges and any involvement in a predatory scheme. Select Portfolio Services maintains that it has done nothing wrong in servicing Dillon's loan.

A signed affidavit by Select Portfolio Services CEO Matt Hollingsworth says the company has gone to great lengths to explain Dillon's mortgage to him. According to the affidavit, Dillon owes the company more than $48,000 because he has not paid any principal or accrued interest on the loan since 2002. Extra work on the case by employees and two outside law firms has cost the company more than Dillon owes, Hollingsworth said.

"My clients have faith the federal court will find that they acted appropriately and Mr. Dillon has been afforded fair opportunity to comply with the terms of his loan obligations," said Dorothy Davis, a Pennsylvania lawyer representing Select Portfolio Services and the other companies Dillon is suing.

The struggle against an industry

Maroney said he knows it will take "a guerrilla attorney" to win a case with 23 federal charges against six national companies.

"Large companies can file lots of paper, and they have the ability of appealing. They have deep pockets to throw a great amount of resources at you," he said.

Maroney, 53, left the Concord law firm of Gallagher, Callahan & Gartrell last month after seven years as a partner to start his own one-man consumer protection practice.

He will be working on the Dillon case alone, without even a secretary to take his calls or greet those who drop by his new Manchester office.

Maroney knew the case would mean lots of late nights and weekends of research and writing, but he took it because he thinks Dillon is onto something. The way subprime loans are bundled and serviced is unfair to homeowners who lack the resources to deal with problems that might arise. Subprime loans assess higher-than-average interest rates and are marketed to people with credit problems that bar them from better deals.

Dillon believes he has been the victim of mortgage servicing fraud - a scheme to collect extra revenue from unwarranted late fees, insurance the homeowner may already have, and illegal foreclosures.

Maroney hopes it will be a precedent-setting case. He thinks mortgage servicing fraud is a growing problem in the industry. By drawing attention to it, he hopes laws might be changed to better protect consumers.

Maroney said he believes Dillon's claims are indicative of a larger problem in the subprime lending industry. The way the agreements are written between the mortgage holding companies and their servicing companies are too lax, creating incentives for the servicers to make extra money in fraudulent fees and penalties, he said.

Dillon knows the odds aren't in his favor and he doesn't care. He's gone through periods of feeling discouraged, sad and angry about the case. Right now, he feels that he has "at least a 50-50 shot" of winning.

At this point, Dillon says it's more about the big picture battle than the house.

"I've handed Walter the house keys before as a way of saying, 'Look, take the damn house, but I'm not giving this up.' You get tired doing this, there's no question, but I won't give up."

------ End of article


Monitor staff
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link :)

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Old post Today at 04:57 PM  Reply

Taking on an industry
Concord Monitor - 17 hours ago
Dillon believes he has been the victim of mortgage servicing fraud - a scheme to collect extra revenue from unwarranted late fees, insurance the homeowner may already have, and illegal foreclosures.

 Great Job Mike!

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Joseph Mason, a finance professor at Drexel University, said it could be an uphill battle for investors to prove that financial institutions were negligent or committed fraud. Still, he agreed the housing market crisis could result in more lawsuits and a more severe financial impact than Enron and other market meltdowns.
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we needz to send z investors some evidence... So they will know...

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Awww shucks guys... Now if I can just keep remembering to put pants on before I leave the house in the morning....

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Joe B
Go get 'em Mike!!

You guys are blazing a trail for the rest of us.

What amazes me is that Fairbanks has spent 6 years fighting over $40K. Do any of these guys have any business acumen at all? Or, could it be that they are not paying the legal bills, hmmmmm...

Nye says follow the money; couldn't agree more. When there's no risk, and only reward, is it any wonder why they do these things?

Come on, how many people get extorted, pay their fees to "save the house," and enrich Fairbanks and others; and sign away their rights to do it? There are not enough people willing to fight for 6 years to make things right, and cause them real financial pain! Guys like Mike are few and far between, and the costs to Fairbanks to fight him pale in comparison to all the other money they are collecting by people not willing or able to fight!

As yourself this question: Even if Fairbanks was right (I know they are NOT), and Mike owed $5-10K. Why wouldn't Fairbanks be willing to make it all go away, and let him keep his house for a modest amount of money? Is there a sound business person alive who wouldn't trade a few thousand dollars today to save a huge unknown risk in the future?

Because it is more profitable for them to fight; it can be the only answer! Could litigation actually be a profit center for these guys?

Good hunting!!
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Mike's really getting around... Keep up the Great Fight Mike!
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They have spent over $1.5 million fighting my family and I and trying to shut me up for a $100,000 loan we offered to pay in full in cash if they could provide proper documentation. They then demanded over $650,000 to pay off a $100,000 note! The same was done to Jack Wright and they want you to pay their legal fees for exposing their crimes. They also target those who uncover and expose these abuses since they want to send a message according to our sources.

I, Jack and Mike all had websites. Also, there we have had death threats, computer hacks and one man's home burned down, his computer missing and dog killed!

This is some very serious SHIAT!
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Great Job Mike really appreciate all your efforts!

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I agree this is definitely the right track to take.

You can almost see a definite pattern by the servicers to be linked to the secondary market and many of the supposed outsourced providers like force placed insurance, appraisals, legal fees are also linked back to the servicer
or upward facing the corporate entities.

Why do they nail you with excessive legal fees?

Its easy to do.  It is more than profitable.

What borrower is going to say, hold it.  These charges are neither reasonable or necessary given the small amount of work done.

In fact, they charge outrageously before any work is done.  What does it take to set up a file?  Maybe 10 minutes.  That work would be done by a clerical person if they bother to set up a file at all.

How much for one appearance in court?  How much for a letter or a phone call? 

If you've got a case going, try to get a court calendar for that day to find out how many cases they appear on in that particular court session.

More than one?  Charging each with a full bill?

Do they charge a flat fee for the foreclosure?  If so, how much?

I remember reading many Fairbanks victims reporting that as soon as the case was referred to an attorney, they put a $10,000.00 fee to the loan
for legal services.  Nothing had been done yet.  Seems like more than
a little excessive.  Whatever money you send in, they charge it off to
legal expense rather than principal and interest.  The borrower is now
getting further and further in the black hole.

Who has ever received a copy of the policy you pay for with the force placed insurance?  Request it.  Do you even know the name of the company so you can call to get the details of the policy you are paying for?

How do you know whether or not they have actually paid anything for a policy?  You don't and I suspect there are  going to be cases where they have collected the money for it and not purchased a policy for you.  I think it goes right into their pocket while you  are flipping and flopping busy trying to get them to admit you have your policy.  The longer they stonewall you, the more damage they will do to the principal and you can kiss your equity goodbye.

One thing I see as positive is that the secondary market suddenly seems wide awake that they have been sold a bald faced lie regarding the value
of the loans that are starting to fail upon the mortgage interest rate resets.

Let the games begin as everyone involved points the finger at someone else.

Don't let them fool anyone.  It becomes a cause and effect issue.  Nobody has done "due dillegence"  before they jumped on the bandwagon of the profit being too good to be true.

Be sure to follow the litigation as they sue each other  to see what issues they bring up that you could use to your advantage.

I don't know what it is going to take to get focused on the fact that the borrower has been exploited and deserves redress every bit as much as the
secondary market. 

This whole mess reminds me of a HYDRA;
Hydra, also called the serpent of Lerna, was a beast with the body of a hound and 100 serpentine heads. As if this weren't bad enough, it also had poisonous breath and it was so hideous that it caused most people to die of fear from simply seeing it. One of Hercules' great tasks was to kill this monster. When he started to fight it, he discovered that every time he cut off one of the heads, three grew back in place of it. Seeing this was getting him nowhere, he had his charioteer, Iolus, burn the stump after each time he cut off a head, which prevented the unfortunate regeneration. The last head was immortal, however, so after cutting it off, they trapped it under a rock.

Those of you that can keep fighting are courageous indeed.

I like seeing Jack and Nye preparing the trap to put Bear Stearns under a rock.  It shouldn't be so hard catching the monster in fraud to get justice.

You've made taking the next step forward easier for borrowers.

What a great benefit.


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Yeah! Mike  Yeah!Nye Yeah Jack! Yeah Everyone in this fight

You guys are all my heroes
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  GO MIKE!!!!  just when i get all discouraged and ready to throw in the towel, i come to this board and read this!!!! GO MIKE!!!! 
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Great Job Mike!!! and Thanks for your support

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Not all or our hero`s are over sea`s....we have them right here at home fighting terrorism on the "home front"

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4 justice now
Good Day to All!

I know there are many others who have been, and continue to be extremely dedicated to the fight against domestic terrorism here (too many to list I'm sure). But, I would like to suggest that Mr Gary Wait is added to the fine list of Hero's here as he has uncovered and delivered an enormous amount of very important information to the attention of others in this fight.  

I know it can never be said often enough, so once again: I do wish to thank the fine people who make this site even possible, and those of you who post here as a service to others. It's outstanding people like yourselves that have convinced me of the fact that honesty, integrity, bravery, self-sacrifice and other admirable human qualities are still alive and well, even in our society today.


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I don't know about anyone else, but I  have big expectations from Gary.

Again, anyone that works on the mortgage fraud issues at least deserves
our respect.


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jeez - and all that time I must have been up all night long talking to myself on the phone huh!!!  Well, that's what us Cunnermen do!!!!! And then we give out legal advice or is that add vise???????????????

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I can't Wait to see RICO take a turn in this. Does anyone have any good case law regarding this kind of thing?

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I wish I had this guy here to help me! I'm being squeezed into foreclosure. I had a verbal agreement and a quoted monthly payment at 7% on a 5/1 mortgage from Concord Mortage Corp. but after the paperwork was all signed and the first payment arrived it stated it was an adjustable rate at 9.35.I'm screwed. I had contacted the loan officer and all he said was too bad you signed.So much for trust.

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Way To Go

Un-confuse us here. Are you saying you signed for an ARM @ 7% and you have discovered after settlement that it is in reality a 9.75% ARM?  Or, are you saying you signed for a 9.75% ARM "thinking" it was at 7%?

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