06 Nov Has Your Mortgage Been Artificially Surcharged With Improper Junk Fees?
Today’s issue of the New York Times includes a feature entitled “Dubious Fees Hit Borrowers in Foreclosure.” The article describes a phenomenon that most bankruptcy lawyers see on a regular basis – bizarre and unexplained fees tacked on to a mortgage balance when a property enters into the foreclosure or bankruptcy process.
Mortgage companies manage huge portfolios of mortgage loans using sophisticated computer programs. These programs automatically add a wide range of fees and costs to delinquent loans. Since most people going through a foreclosure or a Chapter 13 do not have funds available to retain accounting or legal help to review their loan documentation, these extra fees often go unchallenged.
I recall distinctly a Chapter 13 case involving a mortgage where the lender added over $1,000 in extra fees despite specific court instruction that allowed for only $300 extra.
In many cases involving mortgage fee overcharges, the debtor ends up in Chapter 7 or with the protection of state laws that restrict deficiency balance collections. However, with Chapter 13 becoming far less friendly, we will likely see more instances where mortgage companies actually try to collect these wrongfully assessed fees.
If you suspect that your mortgage has been artificially inflated with junk fees, don’t accept the extra costs without question. More and more lawyers – especially bankruptcy lawyers – are available to examine your situation for possible litigation or settlement demands.
Jonathan Ginsberg, Esq.
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