Help from your Enemies?

Over the past three years, litigation related to the servicing of subprime mortgage loans has cost participants in that industry close to $1 billion, according to one of the consumer advocates who was instrumental in bringing scrutiny to Fairbanks Capital's servicing practices. While you might expect Craig Kenney to be a pariah to the mortgage industry, his counsel is actually being sought by some people in the industry these days, including rating agencies, Wall Street companies and servicers.

That's because nobody wants to find themselves in the position that Fairbanks and other subprime loan servicers found themselves in. Today, a premium is being placed on keeping borrowers, even those that are delinquent or in default on their home loan, content. Part of the objective is to resolve disputes before they mushroom into potential litigation.

The root of the subprime lending industry's problem was customer complaints. Fairbanks deserves kudos not only for addressing the material problems that regulators and consumer advocates found with its collection practices, but also for designing new policies and procedures designed to address consumer complaints fairly and quickly. Sure, it probably costs Fairbanks more to manage customer service than it ...