The NYTimes has a great article about the fees being piled on people who are in foreclosure.

The amounts can be significant. Late fees accounted for 11.5 percent of servicing revenues in 2006 at Ocwen Financial, a big servicing company. At Countrywide, $285 million came from late fees last year, up 20 percent from 2005. Late fees accounted for 7.5 percent of Countrywide’s servicing revenue last year.

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.

I have noticed this in a lot of files. Fees piled on fees. In most cases, when you signed your original loan, you gave permission to the lender to charge these fees. And the loans have been turned over to loan servicers. You are only dealing with the servicer. The lender is some big overseas hedge fund somewhere.

The servicers collect .25% to .50% of the loan amount annually, according to the article. And they stand to gain from all these fees.

Further, borrowers and lenders are far apart as to how much they think is owed:

In 96 percent of the claims Ms. Porter studied, the borrower and the lender disagreed on the amount of the mortgage debt. In about a quarter of the cases, borrowers thought they owed more than the creditors claimed, but in about 70 percent, the creditors asserted that the debt owed was greater than the amounts specified by borrowers.

The median difference between the amounts the creditor and the borrower submitted was $1,366; the average was $3,533, Ms. Porter said. In 30 percent of the cases in which creditors’ claims were higher, the discrepancy was greater than 5 percent of the homeowners’ figure.

I hate to take the lender's side here, but the fact remains that people always underestimate their balance. When I was investing in real estate in California, I found that people consistently under represented how much they owed. And I don't think it's intentional. If you fall behind, you don't want to pay attention to such details. Also, the fact is that the human mind is incapable of getting its brain cells wrapped around how quickly these staggering fees can escalate.

It's a nickel and dime problem that adds up to thousands in charges. Here are some charges that I routinely identify:

• Late charges
• NSF fees
• Property inspections
• Property appraisals
• Foreclosure fees and costs incurred, projected and advanced (three categories!)
• Escrow
• Property preservations

This really makes it tough for someone to stop foreclosure, when they constantly increase how much they owe.