22.  America’s lending industry has divorced itself from the borrowers it once served.   23.  Among other things, securitization has created an industry of companies in the  lending industry who no longer make money primarily from interest on the loans they originate.   Thus, lenders no longer have the financial interest in the repayment of loans that they once did.   Instead, financial institutions, through their network of subsidiaries, operating entities and  divisions, service or administer mortgages for hedge funds and investment houses who own the  loans.  Rather than earn income from the interest on these loans, financial institutions like  Mortgage Defendants are paid a fee for their loan administration services.   24.  Additionally, under agreements with investors (pooling and service agreements),  loan servicers like Mortgage Defendants assess fees on borrowers’ accounts for default-related  services in connection with their administration of borrowers’ loans.  These fees include  Broker’s Price Opinion fees, appraisal fees, and property inspection fees.  Mortgage Defendants’  collection of these fees, however, exemplifies how America’s lending industry has run off the  rails.   26.  For financial institutions like HSBC Bank and PHH, who are determined to  maximize the money they earn from loans serviced by HSBC Mortgage and PHH Mortgage, the  right to charge third party fees has opened the door to a world of exploitation.  As a result of the  disassociation between loan servicers and the monies generated from the interest borrowers pay  on their loans, Defendants have been incentivized to find other ways to grow their profits.   27.  Defendants, with their subsidiaries, affiliated companies, intercompany divisions,  and third-party “property preservation” vendors, each formed an unlawful enterprise and decided  to game the system.    28.  In short, as explained by Adam J. Levitin, Associate Professor of Law at the  Georgetown University Law Center, in testimony to the United States House Financial Services  Committee, Subcommittee on Housing and Community Opportunity, “Servicers’ business model  also encourages them to cut costs wherever possible, even if this involves cutting corners on  legal requirements, and to lard (sic) on junk fees and in-sourced expenses at inflated prices.”7  32.  Rather than being motivated by a specific concern that a lender’s interest in a  property is at risk, Mortgage Defendants’ system is programmed to order property inspections  and BPOs at intervals demanded by private investors and the various government-sponsored  enterprises (“GSEs”) that own the mortgages serviced by Mortgage Defendants.     34.  Every home mortgage contains provisions specifying when payments are due and  when they are considered late and providing that only reasonable fees may be assessed if  payments are not timely.   36.  In fact, GSEs like Fannie Mae expressly warned Mortgage Defendants not to  charge borrowers’ accounts for multiple default-related services unless the circumstances of the  particular property require it.  Fannie Mae’s servicing guidelines explicitly provide that a BPO  shall not be conducted more than every 120-days (unless the borrower is being evaluated for a  loan modification program in which case the lender must order a BPO within the last 90-days).8   Likewise, HUD guidelines explicitly provide that a lender may not charge a borrower for the cost  of repeat occupancy inspections “if there is evidence that the [lender] knew the [borrower] was  still in occupancy, such as documented communication with the [borrower], counseling agency,  the [borrower’s] attorney or the local HUD office…” as such charges are “inappropriate.”9     37.  Defendants HSBC Bank and PHH, their subsidiaries, Defendants HSBC  Mortgage and PHH Mortgage, their “property preservation” vendors, and the real estate brokers  who provide BPOs for HSBC, formed an enterprise and devised a scheme to defraud borrowers  and obtain money from them by means of false pretenses.   39.  Mortgage Defendants conceal these fees for unnecessary default-related services  on borrowers accounts by identifying the charges only as “Total New Fees and Charges,” “Other  Fees,” and “Assessed Expenses” on borrowers’ statements.  Under these categories, Mortgage  Defendants assess fees for property inspections and BPOs on borrowers’ accounts.10   40.  Mortgage Defendants’ automated loan management system is set up to order  property inspections and BPOs, and to assess related fees against borrowers when they are a  certain number of days late on their mortgage, regardless of whether the assessment of such fees  is necessary.  Although such inspections and BPOs purportedly are conducted to guard against  property loss, Mortgage Defendants’ practices are in fact designed to ensure that these fees are  charged to as many accounts as possible, even if the inspections and BPOs are unnecessary.   41.  Moreover, so long as a borrower’s account is past due on one payment by the  requisite number of days programmed into the loan management software, and without regard to  the condition of the property, Mortgage Defendants’ system automatically continues to order  inspections, regardless of whether they are necessary.   43.  The Fidelity MSP system transmits property inspection and BPO work orders to  one of the approved vendors with which Mortgage Defendants have an agreement.  The vendors  who conduct BPOs on Mortgage Defendants’ behalf include Old Republic Default Management  Services and FLSI.  The vendors who conduct property inspections on Mortgage Defendants’  behalf include Safeguard Real Estate Properties, LLC d/b/a of Safeguard Properties, LLC  (“Safeguard”).   44.   Once the approved vendor receives the computer generated work order, the  inspection and/or BPO is performed and the cost is charged to the borrower’s account.   45.  The vendor uploads a finished property inspection report directly into Mortgage  Defendants’ computer mainframe.  Therefore, the computer system, rather than any person,  checks the condition of the property and alerts Mortgage Defendants if a property is at risk.   47.  Further, because the property inspections are ordered based on a computer  program rather than human decision-making, property inspections may be performed on a  borrower’s property regardless of whether the property has already been inspected numerous  times and was previously deemed occupied, well-maintained and in good condition.   48.  Likewise, Mortgage Defendants allegedly conduct BPOs to assess the value of the  property in anticipation of a foreclosure sale.  However, Mortgage Defendants continue to  conduct BPOs and assess the fees to borrowers over the course of several years from the time the  property initially goes into foreclosure up until the time that the property ultimately sells during a  foreclosure sale.   In New York State it takes approximately one to three years for a foreclosure  sale date to be assigned to a property after foreclosure proceedings have been commenced.   Thus, during those years between foreclosure and the ultimate sale of the property, Mortgage  Defendants conduct BPOs every several months.  This practice is not reasonable or appropriate  because such appraisals become outdated and cannot provide an accurate assessment of the  property value at the time the property actually sells during a foreclosure sale.   50.  Mortgage Defendants regularly conducted their mortgage servicing operations by  designing, operating and managing the Fidelity MSP computer software to intentionally charge  borrowers unreasonable, improper and unlawful fees.   51.  The Fidelity MSP system is not tied to the Plaintiff’s or Class members’ mortgage  agreements, but was designed and operated in a centralized fashion to defraud hundreds of  thousands or millions of borrowers that had their mortgages serviced by Mortgage Defendants.   53.  That these computer-generated inspections are unreasonable, confer no benefit on  the lender, and serve no discernible purpose other than to generate revenue for Mortgage  Defendants is further evidenced by the limited nature of the inspections themselves.  The  property inspections ordered by Mortgage Defendants’ computer system are mere “drive-by”  inspections, i.e., the inspector “drives by” the property ostensibly to assess whether the house is  occupied, being maintained, and has not been damaged – a practice that provides little, if any,  real opportunity to determine whether the lender’s interest in the property is at risk.     54.  As part of its scheme to generate fees, Mortgage Defendants repeatedly sent to  Plaintiff and Class members materially false and misleading agreements, contracts and monthly  mortgage statements by mail and wire.  Mortgage Defendants’ scheme was also designed to  conceal its existence and dissuade borrowers from challenging the unlawful fee assessments.   Specifically, Mortgage Defendants conceal the nature of the improper and unlawful inspection  fees from borrowers by listing them on the borrower’s statement only as “Other Fees” and  “Assessed Expenses.”  79.  Plaintiff brings this action, on behalf of herself and all others similarly situated, as  a class action under Rules 23(a), (b)(2) and (b)(3) of the Federal Rules of Civil Procedure.   81.  Excluded from the Class are Defendants, any entity in which a Defendant has a  controlling interest or is a parent or subsidiary of, or any entity that is controlled by a Defendant,  and any Defendants’ officers, directors, employees, affiliates, legal representatives, heirs,  predecessors, successors, and assigns.   82.  The proposed Class encompasses hundreds of thousand or millions of individuals  who are geographically dispersed throughout the United States.  Therefore, the proposed Class is  so numerous that joinder of all members is impracticable.   94.  Plaintiff brings this cause of action on behalf of herself and the members of the  Nationwide Subclass.  Breach of Contract  131.  Plaintiff incorporates by reference in this cause of action each and every  allegation of the preceding paragraphs, with the same force and effect as though fully set forth  herein.  132.  Plaintiff and Defendants entered into a mortgage contract pursuant to which  Defendants agreed to charge only reasonable and appropriate fees for default-relates services,  including property inspections and BPOs.  133.  Defendants breached that agreement by charging unreasonable and inappropriate  fees for inspections and BPOs.  134.  Plaintiff was injured as a result because Defendants charged, and Plaintiff paid,  unauthorized fees to her account; Defendants failed to fully credit subsequent payments owing to  deductions from these fees; and Defendants caused Plaintiff to incur additional late fees because  they failed to credit the full amount of monthly payments owing to such unauthorized fees.  135.  Defendants also breached their duty of good faith and fair dealing by failing to  reasonably exercise their discretion with respect to default related fees by instead ordering  unreasonable and unnecessary property inspections and BPOs.  136.  Plaintiff and members of the Class seek damages from Defendants resulting from  its beach of the mortgage agreement.  Violations of the Racketeer Influenced and Corrupt Organizations Act  (18 U.S.C. §1962(c))  