The federal government predicts that 1.5 million home foreclosures will occur in 2011. Banks pushing for foreclosure have received bad reviews in the last year because of their flawed foreclosure methods. Yet, law firms that have committed fraud while doing the banks bidding have been largely ignored. The firms doing these foreclosures tend to be big, and they do their work statewide. Expect them to be working here, and know what to look for, because Florida, Alabama, and Georgia are having a lot of foreclosures.
The issue is not whether the homeowner is late on his or her mortgage. It is whether the bank's attorney's fees and costs for the foreclosure, which are tacked onto a mortgage deficiency for the homeowner to pay, are fair. In a lot of cases, they are not. For example, in July 2010, the Fourth District Court of Appeal in Florida summarized a case against a south Florida law firm that worked throughout the state filing over 6,000 foreclosures a month for its banking clients. Property owners had filed claims against the law firm and the bank client based on letters the firm sent to them demanding payment for fees and costs. Those fees and costs were alleged to be unreasonable, excessive, or not even currently due for services. The property owners said that in instances where title examination fees were charged by the firm, the fees exceeded the out of pocket and overhead costs for the work. They said that the law firm even sent invoices showing that the title exam was conducted by a title and abstract company when in fact the exam was done by someone working in the firm. Other charges, fees, and costs were billed to the homeowners although the expenses had not been paid by the defendant firm or the defendant bank. On the facts alleged by the homeowners, the district court held that the allegations were more than sufficient for the case to proceed as a class action.
In another case, the Florida Supreme Court came to the same conclusion on nearly identical facts. In that case, the billings for some items of costs were alleged to be more than 5 times the actual costs paid by the firm. A federal bankruptcy court in Ft. Lauderdale sanctioned one firm, called the Florida Default Law Group, P.L., for filing false affidavits claiming penalty interest by assessing a huge fine against it.
The point is this. If a foreclosure action has been filed against you and you have questions about the amounts charged for legal fees or costs, bring your concerns to the attention of a lawyer who can answer your questions. It is unlikely that the scams being perpetrated are limited to just the 3 firms I mentioned. Where there is smoke, there is often fire.
