Baron and Budd is expanding its investigation concerning potentially excessive mortgage default fees to other major financial institutions, including Citigroup (CitiMortgage), Ally/GMAC, American Home Mortgage Servicing and Ocwen Loan Servicing. Termed "default fees," these potentially illegal fees are charged when a consumer gets 20 days or more behind on their mortgage payments.
Earlier this month, Baron and Budd attorneys Roland Tellis and Mark Pifko filed a lawsuit against JP Morgan Chase and Wells Fargo, alleging that the banks illegally charged excessive and unnecessary fees. According to the lawsuit, by adding undisclosed markups to default-related fees, JP Morgan Chase and Wells Fargo may have defrauded struggling borrowers out of hundreds of millions of dollars. Information obtained by Baron and Budd attorneys since the filing of the lawsuit now suggests that these excessive default-related fee practices may be occurring industry-wide, potentially affecting millions of homeowners throughout the country.
"Our investigation has revealed that banks have designed these practices to profit from the ever-increasing number of loans in default, and as a result, banks frequently make more money from loans that are in default than loans that are current," said Baron and Budd attorney Mark Pifko. "Under the loan agreements, default-related service charges must be reasonable and appropriate. Banks are not permitted to mark up default-related service fees to make a profit, but that is precisely what they are doing."
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