NCBLC Blog

CBS News Visits Max Gardner

Bankruptcy Boot Camp: Basic training in bogus mortgage fees

Sunday, Feb 24, 2008 - 09:40 AM Updated: 09:58 AMWSPA Channel 7 News

Greenville, South Carolina

By Heather Sullivan

People across the country are losing their homes in the mortgage meltdown. A leading attorney based in
Western North Carolina says its often due to hidden and illegal fees on their mortgages. That’s why he holds a Bankruptcy Boot Camp to teach other attorneys how to spot bogus fees. He shows you how you can spot them on your own mortgage, too, in this Seven On Your Side Consumer Watch.

Inside a quiet house on a hill in Polkville, North Carolina, attorneys are in basic training. It’s called Bankruptcy Boot Camp. They’re learning how to save homes from foreclosure.The drill sergeant is attorney O. Max Gardner III. Gardner, who is the grandson of a former North Carolina Governor and Undersecretary of the United States Treasury, has been fighting mortgage services in court for years. “What we’re trying to do is educate bankruptcy attorneys about how they can identify and find unlawful, illegal and unreasonable fees and charges that have been charged to the loans of their clients.”
Gardner says the fees are not usually charged by mortgage companies, but by the companies you send your payments to, the mortgage servicing companies. Said Gardner, “It may be a fee for allegedly driving by your house once a month. … It could be a fee for some legal service you didn’t know about. It may be a late charge that is being added to your account when a late charge is not justified.”

Inside the room where Gardner holds Boot Camp is what he calls the Wall of Shame, a series of framed checks he’s won in cases against loan servicing companies. “We’ve got some checks up here for $300,000, $400,000, $50, 000, $60,000 and $75,000,” points Gardner. He says the checks are from just about every loan servicing company out there. The fees start out small, but add up fast. Twenty dollars here may turn out to two hundred dollars there and after a year or so you have two thousand dollars on bogus fees and charges.

Said Gardner, “It can actually put somebody in default. They’re mortgage obligation can go into foreclosure when they’re not really in default and the pressure is on for them to do it more.” Gardner contends that many mortgage servicers “create default” just to claim and charge the additional bogus fees.

Attorney John LaRue traveled all the way from Indiana for Boot Camp so he can help his clients. Said LaRue, “We’ll be able to help them in retaining their homes, rewriting loans, even securing money judgments for them.”That’s the kind of basic training Gardner says attorneys will need in the war against the mortgage crisis. Here are some fees and violations Gardner says to watch out for on your mortgage:

*failing to credit payments to your account on a timely basis;

*applying payments to suspense accounts;

*adding late charges to your loan when you didn’t pay late;

*imposing charges and fees for bogus services;

*charging for insurance you already have and don’t need,

*overcharging for legal fees, property inspections and valuations; and

*failing to notify you when your payments change.

To protect yourself, whether you are in or out of bankruptcy, and whether or not your loan is current or in default,
Gardner suggests asking for a written statement of your payments every six months. If you see a fee you don’t recognize, he recommends sending the loan servicing company a written dispute by certified mail. If the fee is not resolved, you may need to contact an attorney.
Gardner said he starts out in any case with the assumption that whatever the mortgage servicer is saying is wrong. You’ll find more information about Bankruptcy Boot Camp here: http://www.maxbankruptcybootcamp.com/

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