Homecomings, Select Portfolio settle with West Virginia
By MortgageDaily.com staff
6/14/2005

A GMAC subsidiary and Select Portfolio Servicing Inc. settled with West Virginia over claims of charging illegal fees that prompted questionable foreclosures.

Select, formerly known as Fairbanks Capital Corp., of Salt Lake City, and GMAC subsidiary Homecomings Financial Network Inc. of Dallas, have agreed to cancel nearly $11 million in debt for West Virginia borrowers, as well as pay a combined $773,000 in restitution, account credits and refunds to 2,300 consumers, the state's attorney general's office announced.

The two companies did not respond to requests for comment.

The $11 million will clear debt allegedly owed by 267 West Virginia families who lost their homes through questionable foreclosures.

The companies have agreed to clear foreclosure data from the families' credit records, and also to remove all negative information from the reports of 2,300 borrowers who were charged unlawful fees from January 1999 to the present, the office said.

"Although too many consumers have already lost their homes as a result of predatory lending and unfair mortgage servicing practices, the agreements with Fairbanks and Homecomings mark a turning point and will result in the elimination of the major abuses that occurred in the past," stated Attorney General Darrell McGraw in the announcement.

The illegal charges on consumers' accounts that prompted the office to investigate the two servicers in late 2002, included excess late fees, property preservation and inspection fees, corporate advance fees and broker price opinion fees, the Attorney General said.

The state also found that borrowers' chances of foreclosure augmented because Select Portfolio and Homecomings routinely returned payments that were less than amounts allegedly owed, instead of crediting payments to accounts.

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