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Skypala v. Mortgage Electronic Registration Systems, Inc.

2009 WL 2762247 (U.S. Dist. Ct. D. N.J. 2009)

FORECLOSURE; FEES — Even if errors are made along the way in calculating the amount of attorneys fees and costs owed by a mortgagee in a foreclosure proceeding, if some of those fees and costs are less than the maximum allowable under New Jersey Court Rules, there is no violation of the Fair Foreclosure Act.

A lender sent a homeowner a notice of intention to foreclose. The homeowner then requested a payoff statement. The payoff statement it received included legal fees and costs due to the lender’s attorney in connection with the preparation of the foreclosure complaint. The homeowner paid the full amount and the lender discharged the mortgage. No foreclosure complaint was ever filed.

The homeowner then sued the lender and its attorney, alleging breach of contract, breach of duty of good faith and fair dealing, violations of the Fair Foreclosure Act, New Jersey Court Rules, the Consumer Fraud Act, and the Truth in Consumer Contracts, Warranty, and Notice Act. The homeowner alleged that the lender and its attorneys engaged in an unlawful scheme to inflate their profits by charging and collecting various fees that were not permitted by the loan documents or by applicable law.

The Court dismissed the claims that were premised on an alleged violation of New Jersey Court Rules and Fair Foreclosure Act. It found that the lender’s calculations of the attorney’s fees and costs complied with Court Rule 4:42-9(a)(4) in that both the fees and costs were less than the maximum allowable under that Rule. In addition, the Court dismissed the portions of the homeowner’s Consumer Fraud Act claim that were based on alleged violations of the New Jersey Court Rules and the Fair Foreclosure Act. The Court dismissed the balance of the homeowner’s Consumer Fraud claims that were based on “unfair and deceptive assessment and collection of fees” in violation of the Federal Trade Commission Act. It noted that the homeowner’s claims were based on his allegation that the only costs that should have been charged by the lender were late fees and costs shown on one particular exhibit to the complaint. Since the fees charged by the lender’s attorney, and shown on another exhibit, exceeded that amount, the homeowner concluded he was overcharged. However, the Court noted that there was insufficient basis to allege a fraud by comparing figures from unrelated documents. The Court found that since the homeowner failed to demonstrate any unlawful conduct, the balance of his breach of contract claims failed as well and were dismissed.

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