The Games the Mortgage Servicers Play
Several years ago a popular Country song was entitled “The Games People Play.” I do not recall the artist but one of the lyrics went something like this: “Oh the games people play now, every day and every night now, never saying what they mean now, never meaning what they say!” I cannot think of a better short-hand description of the practices of mortgage servicers in consumer bankruptcy cases that this short verse.
The fact of the matter is that the same servicer may say different things at different times. For instance, I have a bankruptcy case right now with Wilshire Credit, a sub-prime mortgage servicer. The debtor was served with a notice of foreclosure on March 11, 2006. The notice stated that the total payoff on the mortgage was $47,839.14 and of this amount $200.00 was for attonrey fees and $131.50 was for property inspections.
The debtor scheduled a meeting with me and pursuant to my standard practice the first thing I had the debtor do was to write Wilshire for an itemized payoff. Under North Carolina law, a servicer must respond to such a request within 10 days or suffer statutory damages of $2,000.00, actual damages and legal fees. Wilshire reponded on May 22, 2007 and stated that the payoff at that time was $48,565.29. This amount included $100.00 for a “broker’s price opinion,” propert inspection fees of $52.00, an insufficient check charge of $25.00, and $0.00 in attorney fees. That is correct–0–in attorney fees.
We then filed a Chapter 13 case for this debtor in order to immediately stop the foreclosure and save the debtor’s home. On September 26, 2007 Wilshire filed a sworn proof of claim in this case that listed the total amount due as $52,221.71. This amount included $52.00 in propery inspection fees, no broker price opinion fees, no insufficient check return fees, but $3,499.99 in attorney fees.
So, what is going on here? First, the March statement was most likely accurate. Second, the May statement was “scrubbed” or “sanatized” to remove any legal fees for fear that we might file a preemptive civil action in connection with the foreclosure. At that point, the state court had not approved any legal fees in the foreclosure case. Third, the September statement included the foreclosure fees (about $900.00) and the rest of $3,499.40 represented bogus “bankruptcy related fees and charges” for all types of real and not so real services. And, more imporantly, none of these bankrupcty fees had been applied for or approved by the Bankruptcy Court.
Yes, the games they play now, every day and every way now, never saying what they mean, and never meaning what they say!
