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85 Year Old Widow Fights Unjust Foreclosure Fees

By M. Stan Herring

The Seattle Times has posted an article about an elderly New Jersey widow who is fighting fees after missing her last house payment. The 85 year old was sent a bill for $5,800 from two banks and their law firms, which is now being called "unfair or unconscionable" by her lawyers.

Ms. Dorothy Rhue Allen had borrowed $40,000 in 1976 to purchase a home and missed the final payment of $432 in 2006 due to hospitalization. The New Jersey lenders, and across the country, are being investigated for the way foreclosures have been handled during the housing crisis.

LaSalle Bank and Cenlar Federal Savings Bank, both based in New Jersey, filed court foreclosure papers against Ms. Allen and have also said that in order for them to fix a $432 mistake, they are charging Ms. Allen $5,797, of which nearly of half is legal fees.

Ms. Allen's lawyers are claiming that the fees are higher than is allowed by New Jersey and by federal regulations and the Federal Debt Collection Practices Act.

For example, court rules limit attorney fees to $15, not the $910 charged; document searches to $75, not $335; and process serving to $175, not $475, the suit said. Allen is now in a nursing home, while a nephew serves as her advocate. The banks stopped foreclosure proceedings after she countersued, and she was able to sell the home in 2008 for $112,000, according to online records.
A district judge in New Jersey had dismissed the lawsuit on grounds the fee notice was never sent to Allen, but only to her lawyers, and therefore was not covered under consumer-protection laws.
However, a U.S. appeals court in Philadelphia ruled this week that the notice amounted to an indirect communication with Allen, and ordered the district judge to revisit the case. Allen is seeking class-action status.

However, this case isn't the typical outcome. 65,000 foreclosures were filed last year in New Jersey and 94% of those went uncontested. State Supreme Court Chief Justice Stuart Rabner said that so many went uncontested because the homeowners were unable to pay legal fees and therefore didn't seek legal advice.

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us. We have also started handling bankruptcy cases.

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Full post as published by Alabama Consumer Blog on March 04, 2011 (boomark / email).