To hear the big banks tell it, the crisis in foreclosure fraud has abated. They’ve checked and double-checked their documents, replaced the forms where necessary, and are now ready to move forward with the conveyor belt to evictions. If that’s the case, why is another top mortgage servicer suspending foreclosures?

Goldman Sachs’ mortgage servicing unit has suspended evictions and foreclosures in some states, according to a regulatory filing Tuesday.

Goldman has been reviewing the practices of its Litton Loan Servicing unit after regulators and states attorneys general asked for information about its practices, as part of an industry-wide probe into banks’ foreclosure practices, the firm said.

Like the other banks, Goldman said it has no evidence of unwarranted foreclosures, continuing the unbroken record of bank executives not reading the news.

Meanwhile, it seems like a new scandal from the servicers pops up every day or so. In this case, banks who take over the insurance for homeowners whose policies have lapsed end up getting a kickback when the insurer ramps up the price. And the homeowners pay the cost.

Nominally purchased to protect the owners of mortgage-backed securities, such “force-placed” insurance can be 10 times as costly as regular policies, raising struggling homeowners’ debt loads, pushing them toward foreclosure — and worsening the loss to investors on each defaulted loan.

Evidence of abuses and self-dealing in the force-placed insurance industry suggests that there may be far larger problems in how servicers are handling distressed loans than the sloppy document recording that has been the recent focus of industry woes.

Behind banks’ servicing insurance practices lie conflicts of interest that align servicers and their insurer partners against borrowers and investors. Bank of America Corp. owns a force-placed insurance subsidiary, and most other major servicers receive commissions or reinsurance fees on the very same policies they purchase on investors’ and borrowers’ behalf.

“There’s no arm’s-length transaction here, and that creates all sorts of incentives for the servicer to force-place excessive insurance and overcharge consumers for policies that provide minimal benefit,” said Diane Thompson, of counsel for the National Consumer Law Center. “Servicers and insurers have turned this into a gravy train.”

This forced-place insurance scandal is heady stuff; Felix Salmon demystifies it. I’m beginning to think that the mortgage servicing industry is just an arm of the Mafia at this point. They certainly know how to run every criminal enterprise known to man to make money. The Dodd-Frank act reportedly prohibits this little scam, but there doesn’t seem to be any federal entity charged with enforcing that on the servicers. In addition, as Felix notes:

And in the meantime, loan servicers would seem to have every incentive to drag out delinquencies as long as possible, if doing so means they get massive insurance revenues. Or the kickbacks associated with them.

If you want to know why servicers are doing what they’re doing, you just have to follow the money trail. It makes financial sense to let delinquencies go without modifying them, it makes financial sense to eventually foreclose instead of giving the borrower an option to stay in the home.

It’s getting so bad if you’re a borrower, you have to go on a hunger strike to get any attention.