Legal Ethics

Bankruptcy Trustee Joins Homeowner Suit Over Law Firm Foreclosure Fees

A bankruptcy trustee has joined a Mississippi family in challenging fees charged by a law firm and other companies involved in a mortgage foreclosure, on behalf of all similarly situated families in bankruptcy in the Northern District of Mississippi.

The law firm, Johnson & Freedman, has participated in “illegal” fee-splitting with two foreclosure-processing companies, the litigation contends, by sharing legal fees under the guise of “administrative fees, document review ‘views,’ document download fees, document execution fees [and] technology facilitation fees,” reports the Wall Street Journal.

Johnson & Freedman declined to comment but a chief executive officer of one of the foreclosure-processing companies said a similar suit filed in Texas had failed to demonstrate any wrongdoing.

A Housing Wire article provides additional details about the case brought by homeowners Darlene and Jonathan Thorne and notes that a similar claim against another law firm, Manley Deas Kochalski, is “buried” in the counterclaims in a state-court foreclosure case in Kentucky.

The Wooten Law Firm in Auburn, Ala., is listed as of counsel in both cases.

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