Monday, July 15, 2013

Colorado AG Begins Probe Into Accusations That High-Volume Foreclosure Mills Are Artificially Padding Their Costs When Processing Foreclosures

In Denver, Colorado, The Denver Post reports:

  • The Colorado attorney general is investigating whether law firms specializing in foreclosures regularly inflate the fees that homeowners must reimburse them in order to avoid losing their house, according to court records detailing the scope of the inquiry.

    Law firms pay as little as $25 for someone to post official notices on a property advising homeowners of their rights, but some then charge as much as $150 in the bills they file with the public trustee overseeing the foreclosure case, according to details contained in four lawsuits the attorney general's office filed against the law firms.

    In two cases, the law firms hired companies, known as process servers, owned by family members and friends, investigators say.

    The fees are allowed by law but are limited to the amount a lawyer actually paid or was billed for a service or expense such as mailing costs, property inspections, title searches and court docketing charges. The charges are tacked on to the overall cost of a foreclosure and the unpaid mortgage amount, then paid by the homeowner facing foreclosure, the foreclosing bank or investors who buy the property at public auction.

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