The first sign of trouble was the notice from a company they'd never heard of, informing Greg and Andrea Hunt of Northwood that their monthly mortgage payment had not been received. Just three months later came a foreclosure notice.

That was in 2005. The Hunts have been fighting to save their home, and restore their damaged credit, ever since.

Unbeknownst to the Hunts, their mortgage company had turned over servicing of their 2004 home loan to HomEq Servicing, a California-based company that handles mortgage and escrow payments for lenders. While the Hunts had sent their regular monthly payment to their mortgage company, HomEq claimed it never received their check.

Over the ensuing months -- now years -- HomEq has assessed late fees, increased escrow payments without notice, and charged the Hunts for an insurance policy they didn't need, according to the couple. Their payment amount seemed to change constantly, and their loan was nearly always in default.

"It's like the never-ending carousel," said Andrea Hunt, who is a legal assistant. "You're on this ride and you don't get off it."

Consumers fight back

The Hunts' story is not unique. Consumer Web sites like complaintsboard.com are filled with complaints about mortgage servicers. And lawsuits against such companies have been filed around the country, initially by consumers, but more recently by investors hit hard by the mortgage crisis.

John Mechem, spokesman for the Mortgage Bankers Association, said he couldn't say much about problems in the mortgage-servicing industry because of pending lawsuits. "There are a number of my companies who are in high-profile litigation as a result of consumer discontent with servicing," he said.

He said a growing number of consumers are having trouble making their monthly payments, "and that puts a serious strain on resources within a servicing operation."

But, he said, "It's not good business for them to be engaged in litigation on this front, so of course they are trying to improve their operations."

Christine Curtin, a spokesman for Barclays Capital, which purchased HomEq Servicing from Wachovia Corp. in 2006, said no one there could comment for this story, even about mortgage servicing in general, because of customer privacy concerns.

Cases of overcharging

Some say the problem is that mortgage-servicing companies have grown too quickly to keep track of the problematic mortgages many borrowers took on in recent years.

Others see something more ominous.

"There are just too many people out there who are complaining about the same basic pattern of facts, and that pattern of facts doesn't happen just by accident, that often, and that commonly," said attorney Walter Maroney.

Formerly chief of the consumer protection bureau at the state Attorney General's Office, Maroney is now in private practice. He represents a Manchester man who has sued his mortgage servicer and related companies for $13 million; the case is pending in U.S. District Court in Concord.

Some see implications for the entire mortgage industry.

Katherine Porter, an associate professor of law at the University of Iowa, is the author of a recent study, "Misbehavior and Mistake in Bankruptcy Mortgage Claims."

►State can do little to help with loan-service woes (1)

She looked at 1,700 Chapter 13 bankruptcy cases, including some from New Hampshire, and found that mortgage servicers often could not produce the documents required to support fees they had charged homeowners. The data, she wrote, "raise the specter of poor record-keeping, failure to comply with consumer-protection laws, and massive, consistent overcharging.

"All families who are trying to pay off a home loan are put at risk if subject to poor or predatory mortgage servicing," she wrote. "... (T)he frightening prospect is that servicing problems among non-bankruptcy families who are behind on their mortgages may be even worse than the bankruptcy data reveal."

Late-fee profits

Some say one problem is that mortgage servicers make their money from late fees and other penalties charged to borrowers.

"There's a built-in incentive for the servicing industry to really rip people off," contends Richard Gaudreau, a Salem attorney who specializes in consumer bankruptcy law. "If they can throw your payment into a suspense account because it's a dollar short, then they can impose a late fee."

Maroney said some mortgage servicers should be prosecuted for their actions, which he characterizes as "fee-skimming."

"If you manufacture a default, and you take somebody's house, explain to me for a second why that isn't theft," he said.

In a recent telephone interview, Porter said the typical market constraints aren't there to help consumers. "You don't get to pick your servicer," she explained. "I could refinance my loan, but I could still end up with the same servicer."

"I wish this were just a one-bad-apple story. It's not," she said. "These practices are across the industry."

And there is no single entity to handle consumer complaints, she noted. "Who your regulator is, or is supposed to be, depends on who made your loan and who currently holds your loan."

Sorting out the mess

Peter Wright is director of clinical programs at Franklin Pierce Law Center in Concord, which offers free legal help to low-income individuals.

He said he recently obtained a court order in a bankruptcy case to force Countrywide to provide a complete accounting of the fees and penalties the company had assessed against his client. "And finally -- finally -- they sent the figures out, and they admitted they made a mistake."

But it took five months to reach that point, Wright said. "If I was billing the client, it could easily have been over $2,000," he said. "You're already having trouble with the mortgage. Who can afford $2,000 to arm-wrestle the servicers over these bogus charges?"

Nancy Michels, a Londonderry attorney who handles bankruptcies, said she wants to believe there is nothing sinister behind the growing number of mortgage-servicing problems she sees in her practice. Instead, she said, "I think part of the problem is that because of the huge boom in the subprime mortgage market, mortgage servicers got overloaded because there were so many new mortgages coming on the market.

"There were a couple that expanded greatly in a very short period of time, and we all know that's a recipe for disaster."

Porter characterized the problems in the mortgage-servicing industry as "systemic intentional negligence." She said many companies lack the staff, training and technology "to be accurate and to be fair."

"I don't know that they set out to rip consumers off, but what I would say is they do know that they overcharge or make mistakes or act without following the law," she said. "And they have not been willing to put in place improved systems to prevent that, to make sure they are complying with the law."

Over the past two years, the Hunts took their complaints about HomEq Servicing to state and federal agencies, but got nowhere. They've tried to refinance with a different company but can't because of the foreclosure listed on their credit report. They now plan to file a lawsuit.

"We have to keep fighting them," Andrea Hunt said. "Nobody will stand up to help the little guy."

Where to go for help

Homeowner hotline: Residents with concerns or questions about their mortgages can call the N.H. Banking Department's Homeowner Hotline at 1-800-437-5991. For information about free consumer outreach sessions, visit: nh.gov/banking/outreach.html.

Avoiding foreclosure: For free foreclosure prevention counseling, call the Homeownership Preservation Foundation at 888-995-HOPE. For information, visit hopenow.com or 995hope.org.

Mortgage servicing issues: For information about mortgage servicing, including how to file a federal complaint, visit: ftc.gov/bcp/edu/pubs/consumer/homes/rea10.shtm.

Staff reporter Shawne K. Wickham's e-mail address is swickham@unionleader.com.