County treasurer puts mortgage lenders on notice over letters

Cook County homeowners, don't let that letter from your mortgage company scare you.

If you're an escrow client, you're not responsible for the late-payment penalties assessed to your property-tax bill.

The mere suggestion -- made in letters sent to thousands of area homeowners this week -- prompted Cook County Treasurer Maria Pappas Wednesday to publicly attack the home lending industry.

"First they wreck the U.S. economy with their subprime mortgages," she said. "Now they come in here frightening homeowners. I'm not going to allow it."

In an effort to avoid paying a $5 duplicate bill fee, mortgage companies have been sending letters to Cook County homeowners asking them to mail in their recent tax bills. The letters warn that failure to comply with the request could result in a hefty late-payment penalty.

But federal law holds the lenders -- not homeowners -- responsible for late fees levied against escrowed accounts.

"The lenders are on the wrong side of the issue," Pappas said. "They're greedy, greedy, greedy, greedy."

The $5 duplicate-bill fee was approved by the county board in October. Last week, Pappas' office mailed the second installment of the 2006 tax bill to homeowners.

Almost immediately, mortgage companies sent letters to clients requesting the bills. Pappas has forwarded the letters to the county state's attorney's and Illinois attorney general's offices for further review.

Among her main targets is lending giant CitiMortgage. The company, which made 84,000 tax-bill payments in Cook County last year, is among those that threatened their clients with late fees. Under Cook County law, delinquent property tax payments are assessed a penalty of 1.5 percent per month.

Pappas said she spoke with CitiMortgage CEO Bill Beckman Wednesday and told him he had a fight on his hands.

"This is a David-versus-Goliath situation," she said. "He picked the wrong David."

CitiMortgage issued a statement late Wednesday saying it would not impose fines upon clients who don't provide copies of their bills.

"We have been working within a very tight timeframe to comply with the requirements of this recently passed ordinance," Citi spokesman Mark Rodgers said. "Accordingly, we reached out to our customers for help with the process. Although we are still working through some related issues, we want to assure our customers that we plan to pay all of the tax bills involved on time regardless of whether or not we receive a copy of their tax bill form."

Marv Stockert, executive director of the Illinois Association of Mortgage Professionals, said lenders are seeking ways to avoid the new $5 fee amid the troubled housing market. CitiMortgage, for example, could find itself paying roughly $420,000 under the new policy.

"With the economy in the mortgage industry right now, I'm sure they don't want expenses they don't need," he said.

The association -- which does not support misleading statements about late fees -- recommends homeowners mail the bills to their lenders. They can be sent quickly, Stockert said, using the pre-paid envelopes inside the letters.

"We don't like the fee," he said, "but as long as it's not hurting the consumer, we don't object to it."