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New York Times today covered a story on the myriad of fees that are hitting people who can afford it least – people who are struggling to pay their increasing mortgage or are foreclosing on their homes. In Dubious Fees Hit Borrowers in Foreclosures, 7.5% of CountryWide’s service revenues came from late fees – almost $300 million worth:

But these are not the only charges borrowers face. Others include $145 in something called “demand fees,” $137 in overnight delivery fees, fax fees of $50 and payoff statement charges of $60. Property inspection fees can be levied every month or so, and fees can be imposed every two months to cover assessments of a home’s worth.

It goes to show that when revenues are being squeezed in one area (tougher lending environment), lenders will find other ways to make money, and in situations where regulation is lax, some of these lenders’ business practices can make worse a home owner’s nightmare.

Accredited Home Lenders Holding Company is laying off more than half of its employees, close 65 branches, and stops accepting new mortgage applications in its struggle to survive the currently turbulent mortgage market. According to Associated Press, which reported on this story, mortgage lenders have been “stung by decaying credit quality and a newfound fear of risk on Wall Street,” as more than 50 lenders went bankrupt this year alone.

We bought a home in 2005, when the Southern California housing market was still ridiculously hot. Given how risk averse and fiscally conservative we were, we made sure we had a 20% down payment and almost 2 full years of mortgage saved up before purchasing the house we now live in. I was struck by the amount of TV and radio advertising and promotion that mortgage lenders engaged in, and thought some preyed on the ignorance of the consumers that would only come back to bite the lenders. Now it looks like not only are gullible consumers paying for it, the businesses that were only too happy to make a quick buck are paying for it too.