Fannie Finds Fairbanks Servicing Inadequate

Fairbanks Capital Corp., the nation's largest subprime subservicer, charged borrowers "improper fees" on Fannie Mae-owned loans, according to a new audit conducted by the secondary market giant.Responding to a request by Sen. Paul Sarbanes, D-Md., Fannie audited Fairbanks' servicing practices on its loans, discovering, among other things, that the company had inadequate controls and inadequate dispute resolution practices. A letter written by Fannie Mae chairman Franklin Raines to Sen. Sarbanes notes that Fairbanks has agreed to "implement remedial actions" and "fairly compensate any borrowers charged inappropriate or improper fees." Sen. Sarbanes said the agreement between Fannie Mae and Fairbanks "represents a dramatic step toward preventing the abuses that have been so harmful to homeowners..." Freddie Mac is conducting a similar review of Fairbanks' servicing practices and plans to report its findings to the Maryland Senator "shortly," a spokesman said. Fairbanks, based in Salt Lake City, also is reviewing its portfolio and it has pledged to resolve consumer disputes in an equitable manner, a spokeswoman said.