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Following the paper trail

Original documents

Oregon law requires lenders that are foreclosing on a property to publish notices on four consecutive weeks in the classified section of a local newspaper. This law and others are in place to ensure that lenders make every effort to notify owners that they are about to lose their property. Lenders often contract with a company called a trustee service to handle the details of a foreclosure proceeding. In Deschutes County, Northwest Trustee Services is one such company, and its affiliated business, FEI, handles the publication of foreclosure notices. The following documents, obtained from a state agency through public records requests, show how in one instance FEI inflated its publication costs, passed those inflated costs to a lender and ultimately to the state for reimbursement. According to an Oregon Housing and Community Services spokesman, the agency only reimburses for costs actually incurred.

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Here’s how it worked 1 In this case, lender US Bank Home Mortgage initiated foreclosure proceedings on a Bend home. The bank contracted with Northwest Trustee Services to do the work. Northwest Trustee Services then had FEI publish the newspaper notices. The notices ran in The Redmond Spokesman on March 16, 23, 30 and April 6, 2011. 2 In two monthly invoices dated March 31 and April 30, 2011, Western Communications billed FEI for the four notices, for a total of $1,007.97. Source: Bulletin staff research

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The payee code is Fennell: Attorney David E. Fennell is a managing partner in both FEI and Northwest Trustee Services. An Oregon State Bar complaint filed this past week accuses Fennell of being complicit in the inflated invoices.

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MARCH invoice

$252.15 + $251.94 + $251.94 + $251.94 $1,007.97

April invoice

3 FEI then sent an invoice dated April 12, 2011, to Northwest Trustee Services, charging $1,185.85 for the publication costs. FEI added 15 percent, $177.88, to the publication line item, which it did not indicate on its invoice.

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4 In a June 15, 2011 invoice sent to US Bank Home Mortgage, Northwest Trustee Services included the $1,185.85 charge in a list of foreclosure proceeding-related expenses, totaling $3,000.11. With the trustee fee — which covers overhead, labor and profit — the bill totaled $3,675.11. 5 A follow-up invoice from Northwest Trustee Services to US Bank Home Mortgage shows the total bill of $3,675.11 was paid on Aug. 22, 2011. 6 The $1,185.85 charge is again listed on an attached, itemized list.

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7 Because the borrower used an Oregon first-time homebuyer program, US Bank Home Mortgage had the right to claim reimbursement from the state for some of the expenses incurred during the foreclosure. On a state reimbursement claim form, US Bank Home Mortgage requested the $3,000.11 worth of expenses. Heidi Hagemeier and Andy Zeigert / The Bulletin


Foreclosure graphic