Judge Orders Mortgage Lender’s Attorneys To Review Bankruptcy Claims

09 Jun Judge Orders Mortgage Lender’s Attorneys To Review Bankruptcy Claims

Judge Pat E. Morganstern-Clarren of the U.S. Bankruptcy Court for the Northern District of Ohio, fed up with the shenanigans of law firm Brice, Vander Linden & Wernick, P.C., ordered the firm to review over 1,200 claims filed in pending bankruptcy cases. The edict arose from the judge’s concern that Brice Vander Linden had been filing claims that included improper legal fees charged to the consumer without prior court approval. The results were interesting. Of the 1,266 claims that qualified for the audit, only 173 claims were actually reviewed. Why?

According to Hillary Bonial of the Brice firm:

 

  • 436 were determined to be correct according to the firm’s internal procedures
  • 158 cases were closed before April 1 2008 and so did not need to be audited
  • 267 cases had a Lift Stay order entered before April 1, 2008 and so did not need to be audited
  • 83 cases had loans that were paid in full before April 1, 2008 and so did not need to be audited
  • 42 cases involved loans that were sent to another servicer and so did not need to be audited
  • 60 cases already had foreclosure fees and so did not need to be audited
  • 17 cases had prior bankruptcy fees and so did not need to be audited
  • 30 cases involved some sort of nebulous non-itemized costs and so did not need to be audited
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    So it can be inferred from this pretty exhaustive list that the Brice firm chose only really new cases to audit rather than all of the cases in which inappropriate fees may have been assessed.
     

    The judge’s meaningful attempt to force the firm to account for errors and correct them in a timely fashion was turned into a mockery, a waste of time and paper. Not surprisingly, the audit turned up a whopping 77 files containing errors.

    But here’s the good part: the Brice firm agreed to certain remedial measures on a going forward basis. They include: copies of invoices and/or 3rd party bills will be attached to allow an independent review of the itemization provided on the claims exhibit. The exhibit will not contain any "Reservation of Rights" language. Finally, each claim will have copies of the recorded loan documents, along with any and all assignments, etc, attached to allow the determination of the proper party in interest as to the real property at issue.

    For those of you who are in Chapter 13 bankruptcy or represent people in Chapter 13, this consent agreement may prove useful in your fight against mortgage servicer abuses in bankruptcy. The June 5, 2008 Summary of Proof of Claim Audit Status is attached for your reading pleasure.

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    Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.
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