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New Legal Front in Mortgage Fight: Servicing

The American Banker

August 10, 2001

The mortgage business is under attack from all sides. Consumer groups and lawyers have repeatedly charged lenders with abusive lending practices. A court ruling recently extended liability for predatory lending practices to include buyers of loans in the secondary market. Regulators, too, have been scrutinizing lenders. Now companies that collect payments on mortgage loans are drawing fire.

In a class action filed in March, Bank United Corp., the Houston thrift company acquired in February by Washington Mutual Inc., is accused of improperly assessing fees, including late fees. The lead plaintiff, Laura Sandoval of Tacoma, is represented by four firms, including two that made headlines in their successful class action against Providian Financial Group.

The two law firms from the Providian case that are representing Ms. Sandoval are Girard & Green LP and Lieff Cabraser Heimann & Bernstein LLP, both of San Francisco. In its last fiscal year $18 billion-asset Bank United originated about $3 billion in single-family mortgages and did $31.8 billion of servicing. The thrift started servicing Ms. Sandoval's mortgage in June 1999, when it bought the rights to collect payments on the loan.

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