Fairbanks Mortgage

Allegations Brought Against Fairbanks Mortgage

The central allegations brought against Fairbanks Mortgage dealt with Fairbanks’ failure to post consumers’ mortgage payments in a timely and correct manner. The cases also alleged that Fairbanks Mortgage charged consumers for homeowners insurance when they already paid for adequate insurance through another source. Charges included abusive collection procedures, failure to meet obligations under the Fair Credit Reporting Act, the imposing of unauthorized fees, and other abuses.

Class Action Settlement

Fairbanks Mortgage holders were eligible for money from the FTC redress fund if:

• The mortgage holder submitted a valid claim postmarked by April 24, 2004, for individuals whose loan was serviced by Fairbanks Mortgage between January 1, 1999 and December 10, 2003.
• If the mortgage holder’s loan was in default or if Fairbanks Mortgage treated it like it was in default and were charged late fees or other default related fees.
• If Fairbanks Mortgage imposed a prepayment penalty in violation of contract or law.

Funds Distributed

The FTC settlement fund was divided into two parts. The first part came to about $35 million and was distributed to individuals whose loan ever fell into default. These mortgage holders were eligible to receive money in proportion to the amount of charges incurred through late fees and other default-related fees. People who paid an improper prepayment penalty were also eligible to get a refund of a portion of the amount of the prepayment penalty.

The second distribution amounted to about $5 million. It was distributed to people who lost homes to foreclosure because of the alleged improper loan servicing conducted by Fairbanks Mortgage. Unfortunately, the default-related claims submitted came to a greater amount than the amount held in the redress fund, so each person received a pro rata portion of the fees that Fairbanks Mortgage charged.

Reverse and Reimburse Program

Fairbanks also agreed to reimburse certain charges or reverse such charges. This is known as The Reverse or Reimburse Program. It applied to homeowner’s insurance charges and related late payment fees imposed by Fairbanks when the borrower already had an existing homeowners’ insurance policy. This program also covered tax penalties and interest charges that resulted from Fairbanks’ failure to pay tax payments in a timely manner, or interest collected due to rounding errors. It also covered property appraisal and inspection fees for broker price opinions or inspections that were not completed.

Change in Company Name

After the company reached a settlement, Fairbanks changed its name to Select Portfolio Servicing, Inc. in July of 2004, but was still required to comply with the requirements of the Fairbanks/FTC Consent Order.

Select Portfolio Servicing, Inc. is located in Salt Lake City where they provide financial servicing of single-family residential mortgage loans. The company also services impaired credit loans and non-performing loans for a multitude of clients including leading mortgage finance companies as well as investment and commercial banks.