Consumer Finance Insights
April 27, 2015

Foreclosure Law Firm Ordered to Pay Restitution for Over-Charging Homeowners

On April 27, 2015, the Colorado Attorney General announced that it released restitution payments to over 20,000 homeowners in connection with a settlement reached with a foreclosure law firm. On July 14 2014, the Colorado Attorney General filed a complaint against the law firm, alleging that the law firm charged inflated or illegal fees in connection with the servicing of foreclosures in Colorado. The law firm allegedly exploited its business relationships with banks who hired the law firms for local foreclosures. Once hired, the law firm allegedly charged inflated fees for completing title searches, posting legal notices associated with the foreclosures, and filing the foreclosure lawsuits. The Colorado Attorney General estimated that the law firm charged between $350 and $750 in illegal foreclosure costs per foreclosure. As part of their efforts to avoid foreclosure, homeowners agreed to pay the fees the banks incurred pursuing foreclosure. Thus, the inflated fees were passed on to homeowners who were trying to avoid foreclosure. The law firm settled the suit in 2014, but did not admit wrongdoing. The law firm agreed to pay $10 million in restitution and close its offices within six months. Approximately $7.7 million in restitution payments were sent to Colorado homeowners in April, 2015.