A group of law firms in Philadelphia have been systematically skimming off foreclosure debts by overcharging for their services, according to Michael P. Malakoff, a lawyer based in Pittsburgh. On Monday, his clients Harry and Rosalind Davis sued Bank of America and Philadelphia mortgage lenders law firm McCabe, Weisberg & Conway, alleging the firm and bank had been illegally adding excessive attorney’s fees to their foreclosure debt. The class-action lawsuit could include more than 10,000 other homeowners, according to the complaint.
“We think that lenders’ debt-collecting counsel are overcharging for attorney’s fees,” said Malakoff. Certain law firms, including MWC, charge a fixed amount in foreclosure cases, regardless of how far legal action is carried on. “Most homeowners, they don’t have counsel and they default,” he explained. But they are still charged the high fixed amount, which he argued violates state laws as well as the mortgage contract.
This was pretty much the situation faced by the Davis family. In 1998, the Davises fell on hard times when Harry was permanently injured at work and became unemployed for eight years. When his wife’s sister was murdered, the family also had to support the sister’s three children. To top it off, they lost two nephews to a house fire, and again had to help provide for their family. They lagged on their mortgage payments and fell into foreclosure.
Bank of America, the servicer of their mortgage loan, hired MWC to file a foreclosure complaint in 2012. The complaint requested $156,512, including $1,450 in attorney fees. However, the Davises did not receive a bill detailing the fees which, according to Malakoff, are high given the routine procedures involved.
“These are boilerplate complaints," he said. "The fees are not being incurred.”
Malakoff has been working on similar cases for years, and said it’s common practice among several Philadelphia law firms that work for mortgage lenders. “We probably have thousands of complainys accumulated in Philadelphia, Harrisburg, and Pittsburgh,” he said. However, he suspects that a few of them have walked back the practice. MWC did not respond to requests for comments.
A few years ago, another Philadelphia law firm hired by Bank of America, Goldbeck McCafferty & McKeever, was revealed to be filing foreclosure actions using non-lawyers, which is illegal.
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