If you do bankruptcy work or help people deal with predatory mortgage lending, you should read bankruptcy law expert and consumer advocate Henry Sommer's post over at Credit Slips on unlawful mortgage overcharges. He explains that the overcharges themselves can be so large as to throw people into foreclosure. He also discusses the recent Federal Trade Commission settlement with Bank of America on overcharges for mortgages formerly serviced by Countrywide Financial and asks a series of questions about that settlement in an attempt to discern whether it will get at the problem.
The problem he described struck me as serious, so I wrote to Henry asking for more detail on exactly the kind of overcharges he was referring to (his blog entry mentioned charges for trumped up or unnecessary property inspections, but I wanted to know what else he meant), the magnitude of the charges, and the specific reforms he proposed.
Here's Henry's terrific answer (given within a few minutes of having received my question):
Judge Elizabeth Magner in New Orleans has written some great opinions about this. She has done the painstaking work to unravel some of these accounts. In Jones v. Wells Fargo Home Mortg. (In re Jones), 366 B.R. 584 (Bankr. E.D. La. 2007), aff'd Wells Fargo v. Jones, 391 B.R. 577, she found $24,450 in illegal fees and interest and explained the accounting well. This case included a property inspection charge for September 2005, when access to the property was impossible because of Hurricane Katrina.
You can find many more cases in my book, Consumer Bankruptcy Law and Practice, sections 11.6.1.3.3.5, 12.11nn.521-23, and 14.4.3.4 (9th edition).


Thanks for keeping this important issue in the limelight, where it should be.
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