WASHINGTON – Maryland homeowners who were victims of a mortgage-service company’s “unfair, deceptive and illegal practices” could receive part of a $40 million nationwide settlement with the company, federal officials announced Wednesday.
The Department of Housing and Urban Development and the Federal Trade Commission said Fairbanks Capital Corp. is one of the largest providers of subprime mortgage loans in the country, with more than 500,000 customers nationwide. Advocates in Maryland estimate that the company had about 13,000 in the state.
Federal investigators said the Salt Lake City company would post mortgage payments past the deadline and then charge homeowners a late fee, or misrepresent the amount of money homeowners owed, among other practices.
In addition to the $40 million settlement, former Chief Executive Officer Thomas Basmajian agreed to pay an additional $400,000.
“This settlement should serve as a warning . . . that this will no longer be tolerated,” said Sen. Paul Sarbanes, D-Md.
In a prepared statement, Fairbanks did not disagree with the charges, but said the company will abide by the settlement and already has begun implementing changes. Those include resolving consumer complaints in a timely manner and limiting the amount of some of their fees.
“The American dream has become an American nightmare,” said Sen. Barbara Mikulski, D-Md., whose complaints to HUD sparked the probe of the company.
Officials who announced the settlement Wednesday would not estimate how many property owners are eligible for the settlement or how much they might receive. Any homeowners who agree to a share of the settlement would have to opt out of a pending class-action lawsuit against Fairbanks, said FTC spokesman Brian Sullivan.
Fairbanks’ clients include many who are poor or have a high-risk credit rating. Some lost their homes in foreclosure and others paid thousands of dollars in late fees in order to get a refinanced loan from another provider, said Diane Cipollone of the Community Law Center, a Baltimore nonprofit that is helping residents file complaints against Fairbanks.
Beverly Lankford is one such resident. She said her house is threatened with foreclosure because Fairbanks charged erroneous fees to her account.
Lankford claimed that Fairbanks tacked on an as much as $200 a month to her mortgage to insure her home. She has home insurance through another carrier, but the fee remained on her bill every month even though she tried to call Fairbanks’ customer service hotline and straighten out the matter.
“We weren’t getting any answers for anything,” Lankford said. “It almost like they totally ignored you.”
Now, Lankford said, people eager to buy her house drive onto her small Westminster farm since the local newspaper listed the foreclosure of her home. She has been dealing with the issue for a year-and-a-half while taking care of her husband who was seriously ill, but fighting to keep her house dominated her thoughts.
“It’s something you wake up with and think about before you go to bed,” she said.