Magazine article American Banker

Fairbanks to Settle Charges

Magazine article American Banker

Fairbanks to Settle Charges

Article excerpt

Fairbanks Capital Corp. of Salt Lake City has reached a tentative settlement with regulators in which the subprime servicer will change its allegedly predatory practices, its majority shareholder, PMI Group Inc., said Wednesday.

The $40 million settlement is subject to approval by the Federal Trade Commission, the Department of Housing and Urban Development, and the courts.

A PMI spokesman, Josh Wozman, said Fairbanks had already adopted the new standards, but he would not specify what they are. The FTC would not make officials available to discuss the settlement.

Bradley M. Schuster, the president and chief executive of PMI's Capital Corp. unit, said during the San Francisco company's earnings conference call that the revisions could put Fairbanks ahead of the competition.

Fairbanks' alleged abuses, including overcharges and failure to respond to borrowers' questions, were not "company specific" but an "industry issue," Mr. Schuster said.

Adopting the standards could give Fairbanks a "head start on the rest of the market," said Mr. Schuster, who is also its chairman. "Going through this process at Fairbanks, as painful as it was, we hope to emerge at the other side with very well-defined servicing standards that we hope will be adopted by the rest of the industry."

Legal experts have speculated in recent weeks that the standards would resemble a list of "do's and don'ts" that Joel Winston, the FTC's associate director for financial practices, has been discussing at trade conferences for the past few months. …

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