The governing council of the European Central Bank (ECB) will hold an interest rate setting meeting in Frankfurt on Thursday, with the markets expecting that the ECB's key interest rate will be kept on hold at 4.00pc.

The strengthening euro, the result of a weakening dollar, and money market rates that have remained higher than the ECB rates since the credit crunch broke out in August, are the main reasons rates are unlikely to rise.

Yesterday, the euro was little changed from late US trade at $1.4503 (€1.00193), still near an all-time high of $1.4528 (€1.0036) hit on Friday, the highest since its launch back in 1999.In the earlier part of the summer, the ECB had been expected to have raised rates twice at this stage, to 4.5pc.

Strategy

However, the ongoing fall-out from the global credit crisis sparked by US sub-prime defaults has forced the ECB to change its strategy.

This is despite a surge in eurozone inflation in October to 2.6pc -- up from 2.1pc in September -- and the signal from the US Federal Reserve last Wednesday that its cut in the federal funds rate to 4.5pc is the last for the time being.

Economist with Irish Mortgage Corporation, Geoff Tucker, said yesterday that there was little scope for a rise in ECB rates any time in the near future.

"If anything, the combination of a stronger euro and the wide margin between money market rates and the ECB repro rate has tightened monetary conditions and is, therefore, helping the ECB do its job," Mr Tucker said in a note.

Many investors across Europe have now priced in no more rate changes this year, with only a 15pc chance of an increase by the middle of next year, according to money-market trading.

The median estimate of 30 economists, surveyed by Bloomberg News, is that ECB President Jean-Claude Trichet will leave rates unchanged throughout 2008.

Slow

The economists in the survey project fourth-quarter growth, in the 13 nations sharing the euro, will slow to a 2.1pc annual rate from an estimated 2.5pc in the third quarter.

Some ECB officials still want to keep open the option of raising borrowing costs, particularly because of rising prices in the eurozone.

Prices may climb further as oil sets records over $93 (€64.24) a barrel and the price of food, including milk and wheat, surges.

The inflation outlook in the euro region "is subject to upside risks", Axel Weber, president of Germany's Bundesbank and a member of the ECB's governing council, said in an October 30 speech in Giessen, Germany.

Central bankers will "do what is necessary" to keep prices stable, he said.

The Irish Independent also reports that European stocks slid yesterday as hopes of further US rate cuts evaporated, Credit Suisse warned the global credit crisis was far from over and rumours swirled that some of the world's largest banks will have to declare further large losses stemming from the credit crisis.

The Iseq Overall index ended yesterday's session down 2pc, with the UK's FTSE 100 and France's CAC 40 sinking to the same extent. Among other major European markets, Germany's DAX 30 slid 1.7pc.

The stage was set for yesterday's sell-off after the Federal Reserve, America's central bank, accompanied a widely-expected quarter of a percent rate cut by pouring cold water on hopes of further cuts in store.

The bank signalled that more rate reductions were unlikely if the world's largest economy held up.

The market's woes were compounded when Credit Suisse reported a 2.2bn Swiss franc (€1.3bn) writedown on bad loans and US subprime mortgage investments. The Swiss banking grant rattled the market even further by saying it was too early to predict an end to the credit-market turmoil which has been raging since early August.

Credit Suisse's shares slid 3.7pc to their lowest level in a year.

Meanwhile, rumours that Citigroup, one of the world's largest financial groups, might have to declare further subprime-related writedowns spooked market participants even further.

The talk was sparked as brokerage CIBC World Markets downgraded its stance on the Citigroup's stock, saying the group will need to raise over $30bn in capital in the near term through a dividend cut, asset sales, a capital hike -- or a combination of these measures.

"Any bad news concerning the financials sector in recent times has seen Irish banking stocks among the worst casualties," said a senior Dublin dealer. "Anyone involved in the market has simply spent the day fire-fighting."

Allied Irish Banks slid 3.1pc to €16.70, while Bank of Ireland dropped 4.6pc to €12.15, Anglo Irish Bank fell 2.8pc to €11.28 and Irish Life & Permanent pulled back 4.6pc to €14.92.

Elsewhere in the sector, HSBC, Europe's biggest bank by market value, slid 2.7pc, and UBS closed in Zurich down 4.4pc. Barclays lost 5.4pc as unconfirmed talk circulated the market the UK's third-largest bank may report writedowns and slow growth.

"Conditions in the banking environment are pretty tough," said Andrew Cole, a portfolio manager at Baring Asset Management in London. "There is a sense that we are through the worst. That is probably overly optimistic."

The Irish Times reports that the Irish market fell to its lowest level in more than 15 months yesterday as negative sentiment in the global banking sector weighed heavily on the index. The Iseq index of Irish shares had almost €2 billion wiped off its value as it fell more than 2 per cent to 7,458, its lowest closing level since July 2006.

While sentiment was negative right across Europe and the US, due to the strong weighting of financial stocks on the Iseq - the four main banks account for more than 40 per cent of the index's total share capital - it suffered more than most.

Irish Life and Permanent (IL&P) was the worst performer among the Irish banks yesterday, dropping as much as 6.5 per cent before recovering some ground to end the day down 3.4 per cent at €13.61. Dealers said that in addition to the global negative sentiment, IL&P was also very susceptible to any talk about the Irish housing market.

Anglo, which has been trading in significant volumes recently, also had another bad but very busy day, falling 3.1 per cent to €10.79. At one point the stock traded as low as €10.52.

Dealers said this stock has been the victim of speculation, including talk in the market last week that it had sought additional financing from the ECB.

Anglo carried out a €2 billion financing exercise last week involving the conversion of commercial loans into covered bonds.

These were then swapped with another European bank with the aim of increasing liquidity. John Bowe, head of capital markets, insisted there was nothing unusual about the procedure. Analysts agreed, with one saying that Anglo had simply been the victim of "scaremongering" in the markets.

Scott Rankin, a banking analyst at Davy, said the increased focus on Anglo's performance of late was the impact of a "mushrooming" of concerns about the commercial property sector. As much as 55 per cent of Anglo's lending is tied up in commercial property, with 44 per cent of its loan book coming from the UK.

Elsewhere, Bank of Ireland dropped 3.2 per cent to €11.44, and AIB was down 2.8 per cent at €15.90.

Banks were also the biggest losers elsewhere in Europe as shares declined for a third straight session. UBS, HSBC and Royal Bank of Scotland were among the biggest weighted losers, down between 1.6 and 3.7 per cent.

In London, the FTSE 100 fell 1.1 per cent, while Germany's DAX shed 0.5 per cent and France's CAC 40 lost 0.6 per cent.

The pan-European FTSEurofirst 300 index lost 0.7 per cent, ending the day at its lowest closing level since October 22nd.

"Things could get worse in our view," Credit Suisse analyst Jonathan Pierce said of UK banks.

"It seems increasingly likely to us that recent events could escalate into a full-blown financial crisis. The issue is one of confidence."

The Irish Times also reports that the High Court has appointed an examiner to iQon Technologies Ltd, a Co Louth-based company which manufactures and deals in computers and computer parts and employs 108 people.

The company has registered offices in Dundalk, Co Louth, and liabilities of more than €7 million but is considered to have a reasonable prospect of survival provided certain conditions are met.

On the petition of the company's directors, Mr Justice Peter Kelly yesterday appointed Michael McAteer, of Foster McAteer, as examiner to the company, which has offices at Finnabair Industrial Estate, Dundalk.

Counsel for Philips Consumer Electronic and Microsoft had earlier told the court they were, at this stage, supporting the petition for examinership.

Counsel for the Revenue Commissioners, while not opposing the petition, expressed a number of concerns about the level of pre-petition debts which the company had agreed to pay and sought clarification of several matters.

After hearing evidence in that regard from the company's managing director and submissions from barrister Rossa Fanning, for the company, the judge said he was satisfied to appoint Mr McAteer as examiner.

The judge was told that certain debts had to be paid if the company was to continue in business.

The court was earlier told the company has been in existence for some 18 years and traded profitably before experiencing a downturn in its fortunes in recent years.

It had moved from a situation where it had sustained profits of more than €2 million in 2005 to being now insolvent with a deficit of some € 7.5 million.

A report from an independent accountant has indicated, subject to a number of conditions, that the company has a reasonable prospect of survival. These include developing the three core areas of its manufacturing business and securing further investment.

The Irish Examiner reports that the predicted downturn in the Irish housing market has become a reality with latest figures showing that registrations fell by two-thirds in October.

Rising borrowing costs and concerns about a worsening property slump are causing potential home buyers to exercise far more caution than a year ago.

Housing registrations fell about 66% to 1,315 last month from a year earlier, Dublin-based Goodbody said yesterday.

These calculations were based on data from Homebond, which registers about 75% of new developments.

Building firms lodge house guarantee registrations with an insurance company, like Homebond, before they commence construction. Registrations provide a guide to completions about nine months forward. Since 1978, in excess of 600,000 homes have been registered with HomeBond.

“The pace of borrowing is slowing after eight interest-rate increases by the European Central Bank since late 2005 doubled borrowing costs.

“That’s hitting house prices, curbing the pace of homebuilding and cooling the country’s decade-long property boom,” Bloomberg reported.

AIB Global Treasury recently revised down its forecast for new house builds completed this year to 77,000, from 80,000.

In its October bulletin on the housing market, AIB Global Treasury said the data showed the downturn in housing activity was gathering pace.

“Due to the lags from registration to commencement to completion, the slowdown is only now beginning to be reflected in completion levels,” the bank’s economists said.

New housing completions were up 2.6% in the first five months of 2007 compared to 2006, but in the three months to August they declined by almost 21%.

AIB has already cut its forecast for housing completions in 2008 from 60,000 to 57,000.

Meanwhile, average national house prices declined by 0.3% in September, according to the latest edition of the permanent tsb/ESRI House Price Index. This compares to a decline also of 0.3% in August. Measured over the past 12 months the index shows that average prices declined by 2.8%. Measured since the start of this year, that decline has been 3.6%.

The average price paid for a house stands at €299,483, compared with €308,179 in September last year.

The Financial Times reports that fears are rising in the credit markets that the turbulence could last for months as big US and European banks come under pressure due to losses on US mortgage securities.

Shares in banks and insurance groups continued to tumble on Monday as analysts warned that losses from mortgage securities could force some institutions to shore up their capital bases. The turmoil has already claimed the jobs of two of the biggest names on Wall Street and prices in the US money markets on Monday suggest the climate of mistrust will last well into next year.

Citigroup joined Merrill Lynch in the search for a new chief executive to succeed Chuck Prince. Insiders at Merrill said there were big obstacles to Larry Fink of BlackRock, their first-choice candidate. If he is to succeed Stan O’Neal as chairman and chief executive, the bank may need to buy out his $400m stake in the investment group.

Citi shares were off 5 per cent to $35.96 in midday trade on Monday after falling 11 per cent last week, while the cost of insuring its bonds against default rose to record levels.

Investors sold off shares in European banks, notably Royal Bank of Scotland, UBS and Barclays, amid fears of write-offs.

Sentiment for specialist insurers such as MBIA and Ambac, which provide credit guarantees to lenders and investors, also deteriorated. Michael Cox, analyst at RBS, said: “If losses in US subprime and CDOs [collateralised debt obligations] containing subprime collateral prove worse than anticipated . . . some of the monolines may need to raise fresh capital in order to maintain their triple-A ratings.

Gerald Lucas, senior investment adviser at Deutsche Bank, said: “Investors now believe the credit squeeze will last a lot longer.” He pointed out that the future cost of raising dollars in the interbank market rose sharply yesterday in New York. The projected three-month US Libor rate for contracts which will be struck in three months rose to 45bp from 29bp on Friday.

Huw van Steenis, an analyst at Morgan Stanley, said: “The bear market for banks is unlikely to end until we get some clarity on the extent of the losses... in many cases we’ll not get real clarity until the full-year results next year.”

Frederic Mishkin, a Federal Reserve governor, admitted that although the central bank could use monetary policy to offset the macroeconomic risk arising from the credit squeeze, it was “powerless” to deal with “valuation risk” – the difficulty assessing the value of complex or opaque securities.

The FT also reports that energy consumers and speculators are scrambling to take out options contracts to insure themselves against oil prices rising above $100 a barrel – a further sign of growing expectations of a spike in the crude market.

Some have even taken out contracts to protect themselves against prices rising to $250 a barrel in the next two years.

The buying frenzy has been “extraordinarily” strong in the past week as oil prices rose to a record high of $96.24 a barrel, according to traders and bankers.

“Options calls of strikes well over $100 a barrel are being bought by the thousands,” said Nauman Barakat of Macquarie Futures in New York.

The strong flows in call options – contracts that give the right to buy at a predetermined price and date – are boosting short-term oil prices as the banks that sell them have to hedge some of their positions by buying crude oil in the spot market.

There has already been a sharp increase in the number of outstanding options contracts, or “open interest”, at the New York Mercantile Exchange. This represents only a fraction of the overall market, which is concentrated on over-the-counter deals.

The open interest in Nymex December 2010 call options at $100 a barrel rose on Monday to 24,903 contracts, double the level of the start of the year. The open interest at $120, $160 and even $250 a barrel is also rising although from a significantly lower level. The open interest in $100 a barrel call options for December 2008 has doubled since the start of the year.

Banks hedging the call options they have sold or are selling has been a factor pushing prices towards $100 a barrel, according to traders. But fundamentals have also played a role.

The open interest at the December 2007 call option at $100 a barrel is unusually high at 48,032 contracts. As banks cover their positions, that could push the spot price towards $100 a barrel.

“High open interest for December 2007 calls at $100 speaks plenty of the ingrained nature of the target in market psychology,” said Harry Tchilinguirian, at BNP Paribas in London.

But traders said the market was vulnerable to a correction once the options contracts for December expired next Tuesday.

The New York Times reports that after a recuperative October, investors in the credit markets are starting to feel a familiar sense of dread.

Investors and analysts say the large write-downs of mortgage securities by Citigroup and Merrill Lynch have unnerved the debt markets in the last week, though conditions are generally better than they were during the credit crisis in August.

Investors say they are most troubled by the accelerating pace of write-downs and credit downgrades in the residential mortgage area, but they are also starting to question the value of bonds in related areas like commercial mortgages and consumer debt. For instance, an index that tracks the cost of protecting bonds tied to commercial mortgages has surged since the end of October.

“In the market right now, things feel pretty fragile,” said Derrick M. Wulf, a portfolio manager at Dwight Asset Management, an investment firm based in Burlington, Vt. “And it’s a function of people losing confidence, no longer believing everything they hear.”

Unlike in August, the markets for the investment-grade debt issued by nonfinancial corporations are functioning fairly normally, though prices are not as lofty as they were earlier in the year, analysts say.

Prices on riskier assets are falling, however, with high-yield debt falling steadily in the last three days of trading. The yield on those bonds, which moves in the opposite direction of price, jumped to 9.41 percent yesterday, from 9 percent at the end of October, according to the Finra-Bloomberg Active High Yield US Corporate Bond Index.

In the stock market, the worst losses have come among financial stocks, which are down 7.3 percent in the last five days. By contrast, technology and utility stocks are up about 1 percent. Trading is most strained in residential mortgage securities that are not guaranteed by government-chartered agencies like Fannie Mae and Freddie Mac.

“Buyers are very nervous about defaults in these securities,” said Christian Stracke, an analyst at CreditSights, a bond research firm. “It’s not that the buyers don’t know what the value of these securities is. It’s that they believe it’s very low and the sellers are not ready to come to terms with that fact.”

In the last few days, though, many big banks have been forced to acknowledge that the securities may be worth a lot less than they thought. Citigroup said yesterday that it would take at least through the middle of next year to clean up the mess from credit market losses. Its stock fell another 4.9 percent yesterday despite assurances from company officials that it would maintain its dividend.

In part, they are responding to a wave of downgrades to highly rated bonds issued by collateralized debt obligations, which in turn hold other bonds. “These downgrades are happening quicker than the banks can write down these securities,” said Ed Rombach, a derivatives market analyst at Thomson Financial.

In a sign of the secondary effects that are still to come from the downgrades of mortgage securities, Fitch Ratings said yesterday that it was reviewing its ratings of financial guarantors that insure many of the debt obligations that have been downgraded in recent weeks.

Investors are also increasingly expressing concern about the health of the commercial mortgage market after a boom that was similar to the run-up in the residential market. In recent years developers built scores of office buildings, hotels and condominium towers in New York, Miami, Las Vegas and other big cities. At the height of that market this year, bankers were lending 100 percent or more of the value of projects being built or refinanced.

Default rates have been at historic lows because of low vacancy rates and rising real estate values. But investors are increasingly betting that they will rise as the economy and the job market weakens, according to trading in the CMBX index from the Markit Group which tracks the cost of insuring against losses in commercial mortgage bonds.

Another sign of growing stress in that market comes from data on how many commercial loans are being packaged into securities by investment banks. In October, banks issued just $8.6 billion in commercial mortgage deals, down from a monthly average of nearly $66 billion for the first nine months of the year, according to Thomson Financial. Commercial securitizations peaked at $131 billion in June and have since fallen steadily.

“Across the board, it’s tough to see these things go as far as subprime has,” Mr. Stracke said about commercial mortgage bonds. “But that’s not to say there is not more trouble ahead.”

The NYT also reports that as record numbers of homeowners default on their mortgages, questionable practices among lenders are coming to light in bankruptcy courts, leading some legal specialists to contend that companies instigating foreclosures may be taking advantage of imperiled borrowers.

Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures.

Bankruptcy specialists say lenders and loan servicers often do not comply with even the most basic legal requirements, like correctly computing the amount a borrower owes on a foreclosed loan or providing proof of holding the mortgage note in question.

“Regulators need to look beyond their current, myopic focus on loan origination and consider how servicers’ calculation and collection practices leave families vulnerable to foreclosure,” said Katherine M. Porter, associate professor of law at the University of Iowa.

In an analysis of foreclosures in Chapter 13 bankruptcy, the program intended to help troubled borrowers save their homes, Ms. Porter found that questionable fees had been added to almost half of the loans she examined, and many of the charges were identified only vaguely. Most of the fees were less than $200 each, but collectively they could raise millions of dollars for loan servicers at a time when the other side of the business, mortgage origination, has faltered.

In one example, Ms. Porter found that a lender had filed a claim stating that the borrower owed more than $1 million. But after the loan history was scrutinized, the balance turned out to be $60,000. And a judge in Louisiana is considering an award for sanctions against Wells Fargo in a case in which the bank assessed improper fees and charges that added more than $24,000 to a borrower’s loan.

Ms. Porter’s analysis comes as more homeowners face foreclosure. Testifying before Congress on Tuesday, Mark Zandi, the chief economist at Moody’s Economy.com, estimated that two million families would lose their homes by the end of the current mortgage crisis.

Questionable practices by loan servicers appear to be enough of a problem that the Office of the United States Trustee, a division of the Justice Department that monitors the bankruptcy system, is getting involved. Last month, It announced plans to move against mortgage servicing companies that file false or inaccurate claims, assess unreasonable fees or fail to account properly for loan payments after a bankruptcy has been discharged.

On Oct. 9, the Chapter 13 trustee in Pittsburgh asked the court to sanction Countrywide, the nation’s largest loan servicer, saying that the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007.

The trustee, Ronda J. Winnecour, said in court filings that she was concerned that even as Countrywide misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs.

“The integrity of the bankruptcy process is threatened when a single creditor dishonors its obligation to provide a truthful and accurate account of the funds it has received,” Ms. Winnecour said in requesting sanctions.

A Countrywide spokesman disputed the accusations about the lost checks, saying the company had no record of having received the payments the trustee said had been sent. It is Countrywide’s practice not to charge late fees to borrowers in bankruptcy, he said, adding that the company also does not charge fees or costs relating to its own mistakes.

Loan servicing is extremely lucrative. Servicers, which collect payments from borrowers and pass them on to investors who own the loans, generally receive a percentage of income from a loan, often 0.25 percent on a prime mortgage and 0.50 percent on a subprime loan. Servicers typically generate profit margins of about 20 percent.

Now that big lenders are originating fewer mortgages, servicing revenues make up a greater percentage of earnings. Because servicers typically keep late fees and certain other charges assessed on delinquent or defaulted loans, “a borrower’s default can present a servicer with an opportunity for additional profit,” Ms. Porter said.

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.

“We’re talking about millions and millions of dollars that mortgage servicers are extracting from debtors that I think are totally unlawful and illegal,” said O. Max Gardner III, a lawyer in Shelby, N.C., specializing in consumer bankruptcies. “Somebody files a Chapter 13 bankruptcy, they make all their payments, get their discharge and then three months later, they get a statement from their servicer for $7,000 in fees and charges incurred in bankruptcy but that were never applied for in court and never approved.”

Some fees levied by loan servicers in foreclosure run afoul of state laws. In 2003, for example, a New York appeals court disallowed a $100 payoff statement fee sought by North Fork Bank.

Fees for legal services in foreclosure are also under scrutiny.

A class-action lawsuit filed in September in Federal District Court in Delaware accused the Mortgage Electronic Registration System, a home loan registration system owned by Fannie Mae, Countrywide Financial and other large lenders, of overcharging borrowers for legal services in foreclosures. The system, known as MERS, oversees more than 20 million mortgage loans.

The complaint was filed on behalf of Jose Trevino and Lorry S. Trevino of University City, Mo., whose Washington Mutual loan went into foreclosure in 2006 after the couple became ill and fell behind on payments.

Jeffrey M. Norton, a lawyer who represents the Trevinos, said that although MERS pays a flat rate of $400 or $500 to its lawyers during a foreclosure, the legal fees that it demands from borrowers are three or four times that.

A spokeswoman for MERS declined to comment.

Typically, consumers who are behind on their mortgages but hoping to stay in their homes invoke Chapter 13 bankruptcy because it puts creditors on hold, giving borrowers time to put together a repayment plan.

Given that a Chapter 13 bankruptcy involves the oversight of a court, the findings in Ms. Porter’s study are especially troubling. In July, she presented her paper to the United States trustee, and on Oct. 12 she outlined her data for the National Conference of Bankruptcy Judges in Orlando, Fla.

With Tara Twomey, who is a lecturer at Stanford Law School and a consultant for the National Association of Consumer Bankruptcy Attorneys, Ms. Porter analyzed 1,733 Chapter 13 filings made in April 2006. The data were drawn from public court records and include schedules filed under penalty of perjury by borrowers listing debts, assets and income.

Though bankruptcy laws require documentation that a creditor has a claim on the property, 4 out of 10 claims in Ms. Porter’s study did not attach such a promissory note. And one in six claims was not supported by the itemization of charges required by law.

Without proper documentation, families must choose between the costs of filing an objection or the risk of overpayment, Ms. Porter concluded.

She also found that some creditors ask for fees, like fax charges and payoff statement fees, that would probably be considered “unreasonable” by the courts.

Not surprisingly, these fees may contribute to the other problem identified by her study: a discrepancy between what debtors think they owe and what creditors say they are 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.

Based on the study, mortgage creditors in the 1,733 cases put in claims for almost $6 million more than the loan debts listed by borrowers in the bankruptcy filings. The discrepancies are too big, Ms. Porter said, to be simple record-keeping errors.

Michael L. Jones, a homeowner going through a Chapter 13 bankruptcy in Louisiana, experienced such a discrepancy with Wells Fargo Home Mortgage. After being told that he owed $231,463.97 on his mortgage, he disputed the amount and ultimately sued Wells Fargo.

In April, Elizabeth W. Magner, a federal bankruptcy judge in Louisiana, ruled that Wells Fargo overcharged Mr. Jones by $24,450.65, or 12 percent more than what the court said he actually owed. The court attributed some of that to arithmetic errors but found that Wells Fargo had improperly added charges, including $6,741.67 in commissions to the sheriff’s office that were not owed, almost $13,000 in additional interest and fees for 16 unnecessary inspections of the borrowers’ property in the 29 months the case was pending.

“Incredibly, Wells Fargo also argues that it was debtor’s burden to verify that its accounting was correct,” the judge wrote, “even though Wells Fargo failed to disclose the details of that accounting until it was sued.”

A Wells Fargo spokesman, Kevin Waetke, said the bank would not comment on the details of the case as the bank is appealing a motion by Mr. Jones for sanctions. “All of our practices and procedures in the handling of bankruptcy cases follow applicable laws, and we stand behind our actions in this case,” he said.

In Texas, a United States trustee has asked for sanctions against Barrett Burke Wilson Castle Daffin & Frappier, a Houston law firm that sues borrowers on behalf of the lenders, for providing inaccurate information to the court about mortgage payments made by homeowners who sought refuge in Chapter 13.

Michael C. Barrett, a partner at the firm, said he did not expect the firm to be sanctioned.

“We certainly believe we have not misbehaved in any way,” he said, saying the trustee’s office became involved because it is trying to persuade Congress to increase its budget. “It is trying to portray itself as an organ to pursue mortgage bankers.”

Closing arguments in the case are scheduled for Dec. 12.