MARYCLAIRE DALE
The Associated Press
PHILADELPHIA - An elderly New Jersey widow billed $5,800 after missing the final payment on her 30-year mortgage can pursue her lawsuit against the debt collectors, a U.S. appeals court ruled.
Lawyers for Dorothy Rhue Allen call the fees charged by two banks and a law firm "unfair or unconscionable" and say they violate state and federal consumer-protection laws.
Allen, now 85, had borrowed $40,000 to buy the Deptford, N.J., home in 1976. She failed to make the final $432 payment in 2006 because she was in the hospital, her lawyer said.
"She's just a wonderful little old lady that got sick," lawyer Lewis Adler told The Associated Press on Friday.
Lenders are under scrutiny in New Jersey and across the country for the way they handled foreclosures during the recent real-estate bust. Six lenders , none involved in Allen's case , have been summoned before the New Jersey Supreme Court to fight for the right to stay in the foreclosure business.
The alleged systemic abuses include so-called "robo-signing," in which employees signed hundreds of documents without checking them for accuracy.
In Allen's case, LaSalle Bank and Cenlar Federal Savings Bank, both of Trenton, N.J., filed court foreclosure papers in 2007. Adler's firm asked how much it would take to resolve the problem. The banks, along with a law firm, outlined $5,797 in charges, including nearly $2,400 in legal fees.
According to Allen's lawsuit, those charges are far higher than allowed under federal and state laws, including the Federal Debt Collection Practices Act. For example, court rules limit attorney fees to $15, not the $910 charged; searches to $75, not $335; and process serving to $175, not $475, the suit said.
"The lenders are sloppy and aggressive, trying to collect every penny," Adler said.
Chad A. Schiefelbein, a lawyer for the defendant banks, declined to comment. LaSalle Bank is now part of Bank of America.
A lawyer representing Fein, Such, Kahn and Shepard, the New Jersey law firm named in the suit, did not immediately return a call for comment.
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 for $112,000, according to online records.
But that is not the typical outcome.
More than 65,000 foreclosure cases were filed in New Jersey last year, triple the number in 2006. And 94 percent of them were uncontested, often because homeowners could not afford to get legal counsel, state Supreme Court Chief Justice Stuart Rabner said last month.
Few consumers are even aware of the rules surrounding debt collection, Adler said.
"Most of the time, they don't have a lawyer. They don't know what rights they have to fix this," Adler said.
He is seeking class-action stutus for Allen's suit.
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.
Federal appeals courts around the country have split on that legal question, setting up the possibility it may someday reach the U.S. Supreme Court.
April 2024 March 2024 February 2024 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 June 2022 May 2022 April 2022 March 2022 February 2022 January 2022 December 2021 November 2021 October 2021 September 2021 August 2021 July 2021 June 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 September 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 September 2016 August 2016 July 2016 June 2016 May 2016 April 2016 March 2016 February 2016 January 2016 December 2015 November 2015 October 2015 September 2015 August 2015 July 2015 June 2015 May 2015 April 2015 March 2015 February 2015 January 2015 December 2014 November 2014 October 2014 September 2014 August 2014 July 2014 June 2014 May 2014 April 2014 March 2014 February 2014 January 2014 December 2013 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008