Foreclosure law firm to pay $10m to settle price-gouging complaint
Came to the front when Fannie Mae pulled plug
One of Colorado’s largest foreclosure law firms, Aronowitz & Mecklenburg, confirmed it will pay $10 million to settle a price-gouging complaint brought against it by the state's attorney general.
In a call to HousingWire, Jason Dunn, an attorney with Brownstein Hyatt Farber Schreck, the firm representing Aronowitz & Mecklenburg, said his client is also going to look for someone to purchase the foreclosure operation.
Both firms, the AG alleges, sought to unfairly raise the cost of their foreclosure services, relying on the fact homeowners could not dispute the costs and the state of Colorado lacked proper administrative and judicial tools to prevent the actions.
With most settlements it is understood that Aronowitz & Mecklenburg neither confirms nor denies the AG charges.
The issue really came to the front when Fannie Mae pulled the plug on the two law firms, which is noted in the AG complaint.
“As Fannie Mae informed Castle and other Colorado foreclosure law firms during a 2010 training, its credit losses are taxpayer-funded and every effort should be taken to reduce foreclosure costs, because every dollar reduction in costs is significant when multiplied by a large volume of loans,” the complaint states.
Here are five examples where the firms allegedly gouged distressed homeowners:
1. Charging $125 for each of the two required foreclosure postings for a total of $250 per foreclosure, when the market rate for each posting is $25
2. Charging $275 for title search reports when the market rate is $100
3. Charging $400 to $500 in “cancellation fees” for foreclosure title commitments ordered by the law firm during the foreclosure
4. Charging $50 for a one-page form document that can be completed in seconds and is already compensated in the allowable foreclosure fee
5. Charging $25 for a bankruptcy search that costs $3 or less and charging $10 to $25 for a military status search that is free