Federal Judge: Control Foreclosure Penalties


    A federal judge in Wilmington, Del., where many of the country’s largest companies are incorporated, says he is considering reining in mortgage companies that have been foreclosing on consumers who have brought their home loan payments up to date while they are in bankruptcy.

    This week, several big mortgage lenders, including Countrywide Financial Corp. and Wells Fargo & Co., told Judge Brendan Shannon of the U.S. Bankruptcy Court that he didn’t have the power to decide whether late fees and other costs imposed by mortgage companies on bankrupt home owners are appropriate.

    An attorney for several mortgage lenders, including Countrywide and Wells Fargo, said Congress recognized a “clear bright line” in the bankruptcy law, one that keeps judges from interfering with mortgage companies.

    Shannon dismissed that argument saying that if it were true, he would be on a “complete fool’s errand.”

    Shannon said the “surprise” charges make problems for the bankruptcy system, because home owners who have just emerged from bankruptcy can be forced back into bankruptcy to fend off foreclosure attempts.

    Source: Dow Jones Newswires, Peg Brickley

    By REALTOR® Magazine Online

    Previous articleDon’t Fear Falling Prices
    Next articleMastering Foreclosures