Mortgage lenders' role in foreclosures examined
Story By: Bea Karnes
Source: NBC
A Senate Subcommittee is examining whether the housing crisis is being made worse by some mortgage lenders. Critics say they're preying on families who are already down and out. They claim some big mortgage companies are hitting families already in financial trouble with unfair fees and questionable practices which make it tougher for them to save their homes.
Robin and John Atchley had some financial problems after her sister died, and filed for bankruptcy. They say they were back on track with their mortgage payments when out of the blue, their lender moved to to foreclose. The Atchleys proved they had paid and their lender -- Countrywide -- backed down. But then, a second foreclosure notice arrived, again the Atchleys had to prove their case. In the end, they say, Countrywide hit them with thousands of dollars in unexplained fees they couldn't afford. Beaten down by the stress, they say they sold their home. The Atchley case and others led the federal bankruptcy court to take the unusual step of authorizing an investigation into whether Countrywide is abusing the system and taking advantage of families in trouble.
Other lenders also have been accused of violating basic legal requirements in their rush to foreclose. Sen. Charles Schumer of New York, member of the Senate Subcommittee on Administrative Oversight and the Courts said, "If it just happened once in awhile, you could say maybe this is an innocent mistake, but when you see certain companies have a pattern of this -- over and over and over again, you know that something is rotten."
A recent study of some foreclosures found that questionable fees were imposed in almost half the cases. Katherine Porter, University of Iowa College of Law said, "Anytime a homeowner is late on a payment or defaults in anyway on their mortgage - there is a serious risk of them being overcharged."
Countrywide would not comment on the Atchley case, but says it's error rate is low and it's committed to doing better. A mortgage industry spokesman says some fees are legitimate, but that any lender who takes advantage of families should be held accountable.
