Picture this homeowner nightmare scenario: You send in your monthly mortgage payment on time, but the mortgage company says it never received it. The company sends you a letter warning that you’re one month behind and you owe late fees.

Over the next couple of months, you send in additional payments on time, but the mortgage company counts you as 60 to 90 days in arrears. Worse yet, it sends you a letter informing you that it has no record of a hazard insurance policy on your home, and it is “force-placing” coverage of its own – at a premium charge far above prevailing market rates. This despite the fact that you can produce written proof that a valid insurance policy already exists on the property.

Finally, the mortgage company sends you a letter announcing that your house is about to be foreclosed. The only way you can prevent the sale of your home is to immediately send a check covering all the disputed late payments, the insurance fees, collateral valuation and inspection fees, plus several thousand dollars more to cover legal expenses.

Sound incredible? Hundreds of customers of one national mortgage company say it is not. Their complaints and class-action lawsuits have prompted investigations by two federal agencies and multiple state governments to determine whether the company routinely violated civil and criminal statutes to squeeze money out of its clients.

Whatever the ultimate truth of the allegations or the results of the investigations, this much is clear: The mass outpouring of consumer anger against Fairbanks Capital Corp. and its majority owner, PMI Mortgage Insurance Corp., is on a scale rarely seen in the American home mortgage market.

You can read the consumer allegations in exhaustive detail on a Web site created and run by customers and former business associates, www.conti-fairbanks.com. For its part, Utah-based Fairbanks denies the allegations and says the joint investigations by the Federal Trade Commission and the inspector general of the U.S. Department of Housing and Urban Development will turn up nothing improper.

Bill Garland, Fairbanks’ president, says his firm’s status as the highest-volume servicer of “non-prime” home loans in the country makes it a predictable target for complaints. Non-prime loans are those made to homebuyers with anywhere from slightly imperfect credit histories to those with grave financial problems, including bankruptcy. Of the 600,000 home loans that Fairbanks services, according to Garland, 30 percent – almost 200,000 homeowners – are currently “more than two payments behind.” Fully 45,000 of Fairbanks’ loans are in the process of being foreclosed.

“We have litigation in this business. It’s part of the business,” says Garland.

However, lawyers representing plaintiffs in class-action suits say many of the people who are counted as defaulted or heading for foreclosure by Fairbanks shouldn’t be in that position at all.

In a California complaint consolidating four separate class actions, lawyers charged that Fairbanks’ servicing practices amount to a default-manufacturing “scheme … to generate revenues for itself and PMI.” The suit is now pending in Contra Costa County Superior Court.

Most of the plaintiffs in the suit allege some version of a similar story: Payments they made on time were improperly administered or not credited. Late fees, insurance charges and foreclosure-related fees cascaded upon them month after month.

Fairbanks’ Garland says the firm is only aware of the FTC and HUD investigations at the federal level, and possibly a couple of routine state licensing examinations in other states.

Where is this all headed and what’s the practical significance for you? Only time will tell.