Two Blind Connecticut Sisters Fall To Fairbanks; Lose Family Home Of 54 Years To Foreclosure

In West Haven, Connecticut, the New Haven Advocate reports on another story involving the mortgage servicing company formerly known as Fairbanks Capital Corp. (and which has been known as Select Portfolio Services ("SPS") since shortly after settling a $40 million class action lawsuit brought against it by the Federal Trade Commission involving alleged questionable practices in servicing home loans):

• JoAnne DeGoursey had a "bad feeling" when the mortgage on her West Haven family home was sold to Fairbanks Capital Corp. Eighteen months and two missed payments later, her home was in foreclosure and DeGoursey and her sister were out, victims of a national mortgage servicing company that had swindled thousands of people and snatched their homes through foreclosure. A class action lawsuit felled Fairbanks Capital, but it has since re-emerged with a new name and some of the same old questionable practices, state regulators say.

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• [I]n 2003 the Federal Trade Commission and the Department of Housing and Urban Development sued Fairbanks for violating the Fair Debt Collection Practices Act. The FTC said Fairbanks was unfairly adding $50 late fees to payments made on time (the DeGourseys paid several unnecessary late fees), was forcing clients to buy insurance through them (the DeGourseys were paying an extra $84 a month for Fairbanks' insurance), and was loaning clients money for the insurance and then collecting interest on that loan. They miscalculated bills and refused to break down and explain costs to customers, regulators said. In 2003, the class action lawsuit was settled, with Fairbanks agreeing to a $40 million payout to customers.

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• After the FTC lawsuit Fairbanks changed their name to Select Portfolio Servicing with the same phone number, address and a lot of the same executive staff. Connecticut's Department of Banking has already received six complaints about Select Portfolio since the start of 2007, says consumer affairs manager Carmine Costa, including payoff disputes, collection practices and billing errors—all problems cited in the FTC lawsuit against Fairbanks. [Connecticut Attorney General Richard] Blumenthal's office has heard the same, and is already investigating Select Portfolio—part of a larger investigation into the mortgage industry—for improper fees, inflated home appraisals and other "deceptive practices."

For more, see Un-Fairbanks (How West Haven sisters fell victim to a national mortgage scam, and how it could happen again).

For a related post, see Fairbanks Capital Screwing Mortgage Lender Too, Says Lawsuit.

For a copy of a lawsuit containing a description of how Fairbanks / SPS allegedly has structured its business transactions in the conduct of their mortgage servicing business and which is the subject of the lawsuit, see Ellington Credit Fund, Ltd. vs. Select Portfolio, Inc., et al. (Plaintiff's First Amended Complaint - 19 counts - 52 pages, 2.35 MB approx.) - available online courtesy of Michael Dillon and GetDShirtz.com.

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