November 6, 2007 (LPAC)--Lost mortgage payments, overstated loan amounts, questionable fees, these are some of the ways in which mortgage lenders and servicers are looting people who are losing their houses to foreclosure, according to a study by Katherine Porter of the University of Iowa, who found questionable fees in almost half of the loans she examined.

The Dept. of Justice's Office of the United States Trustee last month announced plans to move against mortgage servicing companies that engage in such tactics, and on October 9, the Chapter 13 Trustee in Pittsburgh asked the court to sanction Countrywide, saying the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007. Late fees on mortgage payments are a big business, with the New York Times reporting that such fees made up 11.5 percent of servicing revenues at Ocwen Financial, a big servicing company, in 2006, while Countrywide saw its late fees jump 20 percent to 7.5 percent of servicing revenue the same year.

"We're talking about millions and millions of dollars that mortgage servicers are extracting from debtors that I think are totally unlawful and illegal," O. Max Gardner III, a lawyer in Shelby, N.C., specializing in consumer bankruptcies, said to the Times. "Somebody files a Chapter 13 bankruptcy, they make all their payments, get their discharge and then three months later, they get a statement from their servicer for $7,000 in fees and charges incurred in bankruptcy but that were never applied for in court and never approved."