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Perkins v. Washington Mutual, FSB

2009 WL 2835781 (U.S. Dist. Ct. D. N.J. 2009)

MORTGAGES; CONSUMER FRAUD ACT — Where a mortgage borrower cannot prove unlawful conduct or an ascertainable loss by reason of it being unable to show that its lender’s attorney received fees in excess of the amount listed in the foreclosure statute or permitted by law, a court will not find a violation of the Consumer Fraud Act.

A lender filed a foreclosure complaint against two homeowners. A final judgment for foreclosure was entered against the homeowners. The final judgment included taxed costs and attorneys’ fees in the amount of $1,893.30. The homeowners then filed a bankruptcy petition under Chapter 13 of the U.S. Bankruptcy Code. The lender filed a proof of claim in the bankruptcy case, which included a line item for pre-petition attorneys’ fees in the amount of $4,131.70. The bankruptcy petition was subsequently dismissed and the sheriff’s sale proceeded. The lender’s attorney prepared a statement of sale which listed the amount needed to pay off the judgment and included taxed costs of $1,893.30. The sheriff’s sale was canceled after the homeowners sold their house to a third party and paid off the mortgage based on a reduced amount agreed to by the lender. The homeowners then sued the bank and its attorneys claiming breach of contract; breach of the covenant of good faith; violations of the Fair Foreclosure Act, Consumer Fraud Act; and violation of the Truth in Consumer Contracts, Warranty, and Notice Act.

The homeowners’ complaints alleged that the lender and its attorneys wrongfully charged them for legal fees in excess of the amount listed in the final judgment and in excess of the applicable limit for attorneys’ fees for Federal Housing Administration (FHA) loans in New Jersey. The United States District Court dismissed the homeowner’s contract claims because the homeowner was unable to prove that they paid attorneys’ fees in excess of the amount listed in the foreclosure judgment, and ruled, in fact, they paid a lesser amount. In addition, even if the homeowners had paid the entire amount listed in the statement of sale, since the statement did not itemize the amount applied for attorneys’ fees there was no way to prove that they paid more in attorneys’ fees than the $1,893.30 listed in the foreclosure judgment. The Court also dismissed the complaint regarding violations of the Fair Foreclosure Act, finding that the Act does not provide individuals with a private right to sue for alleged violations. With respect to the Consumer Fraud Act claim, the Court noted that in order to prove a consumer fraud claim, one must show three elements: (a) unlawful conduct; (b) ascertainable loss; and (c) a causal relationship between the conduct and the loss. In this case, the homeowners could not prove unlawful conduct or an ascertainable loss because they could not show that the lender’s attorney received fees in excess of the amount listed in the foreclosure statute or permitted by law.


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