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UPDATE

Compensation fund established

November 16, 2003|From Times wire reports

Fairbanks Capital Corp., a mortgage service company, will set up a $40-million fund to compensate tens of thousands of customers and settle government allegations of abusive practices that caused homeowners to pay high insurance rates, improper late fees and other unnecessary costs.

The settlement ends a seven-month investigation of the Salt Lake City-based company by the Federal Trade Commission and the Department of Housing and Urban Development.

The company was accused of billing borrowers hundreds of dollars in phony fees and threatening them with foreclosures.

Under a separate settlement, former Fairbanks chief executive Thomas Basmajian, who stepped down earlier this year, must pay $400,000 into the victim compensation fund that will be overseen by the FTC.

The company did not admit guilt in its settlement. Both settlements, filed Wednesday, are subject to court approval.

Fairbanks collects payments and handles bookkeeping for nearly 500,000 loans nationwide. About 12% are in California, HUD said.

For information, visit www.hud.gov/ or www.ftc.gov.

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