George Costanza did it and he got caught. Now the New York Post is reporting that banks are double-dipping on their foreclosure-related fees.
As my partner, David Shaev, noted in the article, “It seems prevalent, and it’s a moneymaking machine.”
Of course, pretty much any bankruptcy lawyer who’s looked at a Proof of Claim in a Chapter 13 bankruptcy case can attest to the same. It’s old news to those of us in the trenches.
In fact, our colleague Linda Tirelli is quoted as saying that “75 percent of her clients face escrow double-billing by their lender or mortgage servicer, for amounts up to $2,800.”
$2,800 is no chump change, either.
Mortgage lenders know they’re going to get their claim paid in full in a Chapter 13 – if the Plan doesn’t provide for full payment of the claim, it won’t be confirmed.
Most bankruptcy lawyers don’t pay much attention to the line-by-line analysis of the Proof of Claim, preferring to check the total amount just to make sure that they’ve got enough in the Plan to make the numbers work.
Combine those two realities and you’ve got a situation ripe for shenanigans. Mortgage lender adds a few bucks to the claim, bankruptcy lawyer doesn’t see it, and the debtor ends up with the short end of the stick.
Luckily, my partner can usually be found with his nose in a Proof of Claim and a calculator by his side. As more bankruptcy lawyers and courts look more closely and understand the game these lenders are playing, however, my hope is that we can start relying on their Proofs of Claim as honest and accurate.
Not holding my breath, but a boy can hope.
Image credit: peyri