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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Lou Dobbs Tonight
This aired last week:

I think Lou gets it.

And tonight, if facing foreclosure weren't tough enough many mortgage companies are hitting those homeowners with undisclosed, outrageous and often illegal charges. We'll have that special report. Stay with us.


DOBBS: As you know, I get more than a little angry about the war on the middle-class in this country. And the number of home foreclosures is now expected to reach two million next year. Tonight, there is growing evidence that some homeowners in this country are in danger of losing their homes because they are being wrongfully charged unnecessary, excessive and sometimes illegal fees by loan collectors, mortgage companies and financial institutions. Christine Romans has our report.

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): Natalie Caruso is desperately trying to save her house. NATALIE CARUSO, HOMEOWNER: Every month I call up and say, OK, everything's fine now, right? And they say, oh, no you owe us $300 more, $600 more, $400 more. And I said this can't be, something is wrong.

ROMANS: Her loan was sold again and again. She said one loan processor was processing her checks, but not crediting her for insurance payments. Then, slapping her with late fees and fines. She is now in bankruptcy protection, battling HomEq Servicing of Sacramento, California over thousands of dollars of fees. HomEq does not comment on individual cases.

But a recent study suggests Natalie Caruso is part of a growing number of homeowners swamped with fees.

KATHERINE PORTER, UNIVERSITY OF IOWA: Poor mortgage servicing can be the difference between a family being able to climb their way out of trouble and save their house and being tipped over to the brink and surrendering their house in a very painful and expensive foreclosure.

ROMANS: University of Iowa's Katherine Porter studied more than 1,700 bankruptcy cases and found unnecessary and in some cases illegal fees had been added to almost half the loans. Most fees are less than $200, like a $35 charge to send a fax. But in court documents, Porter found fees of $5,000 and $8,000 listed simply as other.

PORTER: One of the most chilling findings in my study was that mortgage servicing is not just a one bad apple story. All of the major mortgage servicers have the same, consistent problems. And there's no way for a consumer to really avoid being trapped in this potential risk for being overcharged.

ROMANS: For now, this mother of three says she and her husband's dream of remodeling their home is on hold.

CARUSO: You just are so upset and you're so nervous about losing it, you're like, I don't want to put my blood in it anymore.

ROMANS: Carrying on with daily life, never far from the pile of paperwork that is their struggle to save their house.

ROMANS: Now that there's less money to be made in writing new mortgages, the money is to be made in servicing existing loans. And when those loans go into default, that's where the real money is. There are fees to send an e-mail, fees for the mortgage servicer to drive by the house each month to see if it's occupied. Fees every time the homeowner wants to know what its balance is. All told, dozens of fees that adds up to thousands of dollars when a homeowner is batting foreclosure and bankruptcy, Lou.

DOBBS: And those foreclosures, homeowners, millions of them losing their homes this year and next, well over two million homeowners. And this administration, we want to point out, wants to send a letter to tell homeowners, whose homes are being foreclosed, that there might be some help.

When you see that woman with that pile of paperwork -- and how many of us really, my gosh, we're inundated with this junk, I mean, and then to look at those fees. What in the world is the Federal Reserve doing? What in the world is -- are these regulators doing with these criminal institutions?

ROMANS: Natalie Caruso has meticulous records. She has all the records here. But how many other people, and she's met them in bankruptcy court, who don't have the same records that she has, who are struggling, fighting against big, big corporations, who are saying, you owe this much money. You owe $60,000 than you thought. There is an office in the Justice Department, Lou, that has started to take a look at this.

DOBBS: Oh, good, the Justice Department is swinging in action! I can't wait.

ROMANS: There is a Justice Department office that is a trustee for the bankruptcy court that has started to step in against some of these companies.

DOBBS: Think about that. It's a trustee for the bankruptcy court. These financial institutions, I talk all of the time about corporate America finding a conscience and we're watching these companies do this to people who are on the verge of bankruptcy, facing tough financial times, taking their homes away.

We have idiots in this government, in this administration primarily, and, of course, on Wall Street, trying to put together $75 billion, $100 billion funds for financial institutions, the elitist pigs, while the people who are suffering are getting no support at all from their government. What in the world -- is there a way for these people to get any kind of help?

ROMANS: According to Katherine Porter right now, even the bankruptcy judges are very, very concerned because the lawyers are bumping up against just a brick wall in court.

DOBBS: Well, I'll tell you what we are going to do in this broadcast. Nancy Pelosi, President Bush, Senator Harry Reid, I have no respect, frankly, for their effectiveness in any of their roles.

But we're going to every day requesting that they begin to focus on a populace response to this. And maybe instead of putting $75 billion to $100 billion in front of those financial institutions, maybe they give that money to those homeowners in foreclosure and nearing foreclosure and we'll try a trickle-up theory in this country for a change. Who owns this company, HomEq, that won't comment on what they have been doing?

ROMANS: Barclays Capital owns it.

DOBBS: Owned by Barclays bank. And we're going to call Barclays bank beginning Monday. And Barclays and every other financial institution and ask them how their CEOs, their boards of directors can continue to sleep at night. I mean, this is disgusting.

ROMANS: We'll keep following it, Lou, I promise.

DOBBS: Great. Thank you very much, Christine.


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