Bankruptcy Court Rules That Hitchcock Texas Debtors Don't Have To Pay Mortgage Company Fees for "Notice of Payment Change"

On May 1, 2013, U.S. Bankruptcy Judge Letitia Paul agreed with our objection to a mortgage company trying to charge our clients a $50 fee for filing a Notice of Payment Change due to a change in their escrow account. In re Samuel and Dorothy Boyd, Case No. 12-80400, in the U.S. Bankruptcy Court for the Southern District of Texas, Galveston Division. Judge Paul also reduced the mortgage company attorney fees for filing an Objection to Confirmation, from $400 to $200.

Saving the $250 in fees doesn't sound like it makes much of a difference, until you realize that she ruled that the $50 charge is just not going to be a recoverable cost in chapter 13 cases, because mortgage companies are already required to provide customers with this information, whether they are in bankruptcy or not. The Court stated:

...Debtors object to the $50 charge for preparing the Fee Notice as it is akin to providing an annual escrow statement. Debtors are correct that no fee should be charged to a debtor for filing the form providing Notice as a creditor has a duty under nonbankruptcy law to inform a debtor of amounts that come due under a mortgage.  See In re Carr, 468 B.R. 806 (Bankr. E.D.Va., 2012). The court disallows the $50 charge for preparing the Notice.

I figure if the mortgage companies can't charge my clients the $50 fee for reviewing the Notice of Payment Change, that potentially saves my clients a total of more than $15,000 per year. That was well worth the effort in bringing the objection and going to court.

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