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Servicing Kickbacks Alleged in Class Action

posted by Katie Porter

Last week, a class action lawsuit (Harris v. Fidelity National) was filed against Fidelity National Information Services, a huge player in the billion dollar world of mortgage servicing. "What? I've never heard of them," you say. Fidelity is the company that provides default servicing to most of the large residential mortgage servicers. Their role is a shadowy one; unless you've delved deeply into how consumer mortgages are serviced, you probably weren't aware of their existence--much less how they may be driving up costs for consumers. Foreclosure petitions, proofs of claims, and bankruptcy court motions never bear Fidelity's name (instead they are signed by the regular servicers or by local counsel retained by the servicers.) But despite its invisibility, Fidelity is almost always part of the action in foreclosures or bankruptcy cases.

The lawsuit alleges that Fidelity receives illegal kickbacks from attorneys who work under contract with them. The exhibits to the class action are clear. Fidelity bills its clients--the servicers--for certain fees-- for example, $100 to review a bankruptcy plan. The servicer includes those fees as due and owing on bankruptcy proofs of claims, many of which appear only as "attorneys fees" or "postpetition charges." However, Fidelity requires attorneys to let it "retain" $50 of that $100. Fidelty characterizes these as "admin fees" paid by the attorney to Fidelity. The big problem with this practice is that bankruptcy law requires full disclosure of where the debtor's money is going. If the service is getting the debtor to pay these fees, the bankruptcy court should be approving those charges and who is going to receive the debtor's money. At least, that's how the class action has framed the legal issues in the case.

One final note: the schedule of Fidelty's fees includes a line item for "Drafting Missing Documents." Hmmmm . . . If documents are missing, they are missing. I don't see how "drafting" can appropriately play into this. It sounds like more evidence of "recreating" mortgage servicing documents like the actions by Countrywide exposed in the In re Hill case.

Comments

Could you post more info about this case (court, case no., etc)? Thank you.

This wouldn't be the first time that kickbacks have been alleged in the servicing industry. The possibility was touched upon back in '03 when Jayne Miller of WBAL TV in Baltimore was covering the Fairbanks Capital scandal. Connections were alleged between Fairbanks and Western Union at the time, if I remember correctly, as part of Fairbanks' usage of Western Union's "Quick Collect" payment system. As reported in Ms. Miller's coverage, Fairbanks collections department, I believe, would frequently hold contests to see who could get the most "quick collect" payments in during a designated time frame. Ms. Miller reported that prizes such as gas cards, gift certificates, mini vacations and big screen TVs were some of the prizes available during these "contests". Ms. Miller's coverage can be found on WBAL TV's website http://www.wbaltv.com/news/2360021/detail.html

Similar allegations have recently been made against Fairbanks/SPS in Ellington Credit Fund v Select Portfolio Servicing et al Docket# 1:07-CV-00421-LY-AWA in Travis County District Court, TX.
http://www.getdshirtz.com/ellington.htm

The details of the case are: Harris v. Fidelity National Information Services (In re Harris), Case No. 03-44826-H4-13 (Adv. No. 08-03014) (Bankr. S.D. Tex.). Currently assigned to Judge Jeff Bohm. The debtor's attorney who filed the complaint is Johnie Patterson.

This case provides direct evidence of a massive fradulent practice that has been employed by mortage servicers, Fidelity and their Lawyers for years. From my point of view, the Fidelity approved law firms have been the enablers of this misconduct. They have known from day one how this system works but have said nothing for fear of being terminated or suffering a blow to their precious Attorney Performance Ratings. This case is just the tip of a very large mountain of mischief. Mark Redmiles it is time to call your next case. I would suggest Main Justice, the White Collar Crimes Division for this one. And,we could start a new TV Show entitled: "Fidelity National, Special Victims Unit."

It appears to me that there is also an interesting possible cause of action relating to the Unauthorized Practice of Law!

Scott Anderson, a loan rep for Fidelity National Mortgage in Santa Ana, owned by Weiss? Anyway, I had a broken back, I was on Long term dis. and Scott constantly called me until he coherced me into providing him with 6 month old paystubs and documents to secure a refinance that was suppose to pay off all my debt and help me pay a higher mortgage for 6 months then they would refi for free @6% 30 yr fixed. Scott said because I still had my job with the county after my back surgery, old docs were o.k. Total fraud, he preceded to rip me off 20K from my cash back to pay my debts, 2 didn't get paid, credit not repaired. stuck in a much higher mortgage, I can't even afford to pay. Finally back to work after a year and my home is being foreclosed on. I have owned my home almost 10 years. He called me 3 weeks after major surgery, I was on mass amounts of pain killers and tranquilizers and he had me meet a notary at a coffee shop. No appraisal had been done.I was suppose to get 50K to pay bills and higher mort for 6 months only. rec'd 34K, when I started calling non stop, he was fired within 1 month of my loan financing. I was completely frauded and I have been hospitalized over the depression and anxiety this rip off has cause. I have contacted the mortgage company they sold the loan to Wilshire Credit Corp, they say their not related to FNM. I don't believe them, they sent me a fraud packet and I explained what happen. They denied helping me because they say I signed everything, which is not what i'm contesting. I was coerced into this refi, I was in a great loan and I should of just filed bankruptcy for the credit cards. I had a broken back, my payment was 1200 per month, it went to $2300 per month. I paid for 7 months and now I tell them, I won't give them another penny. I have filed a 70 page document of fraud with the current mortgage company and sent a copy to the California Department of Real estate. I did file bankruptcy the day before they were gonna auction my home. I have no money saved yet, I just got back to work. But I am gonna try and get the media involved, channel 7 news, Mike finney on your side. I'm calling there tomorrow. I also think I'm going to file fraud charges at my local police dept. Please if you have a situation like this or similar and are already sueing Fidelity in Santa Ana California. Please contact me. We could file a class action law suit against them for all the fraud and pain and suffering it has caused me and my family and yours. Sincerely Araminta

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