Suit blames Wells Fargo foreclosure response for bankrupt law firm's financial predicament
A bankrupt New Jersey foreclosure law firm has filed a lawsuit blaming part of its financial predicament on Wells Fargo’s delay in correcting “robosigning” problems.
The Oct. 14 suit (PDF) filed by Zucker, Goldberg & Ackerman claims Wells Fargo was slow to correct foreclosure procedures involving robosigning of documents and foreclosure notices that were called into question by a New Jersey Supreme Court order to show cause in December 2010. The Wall Street Journal (sub. req.) has a story.
The court order required lenders to submit their foreclosure procedures to a special master for review. The order barred banks from proceeding with residential foreclosures until the special master found that the policies ensured robosigning would not occur.
According to the suit, Wells Fargo falsely represented to Zucker Goldberg that robosigning problems would be quickly resolved, causing the law firm to maintain its staffing levels at significant cost. During this time, Wells Fargo required Zucker Goldberg to conduct “voluminous and time-consuming work” on the cases, but did not pay the law firm, the suit claims.
Zucker Goldberg typically paid foreclosure expenses up front and got paid later, usually after a judgment or sale, according to court papers noted by the Wall Street Journal.
The suit claims Wells Fargo owes Zucker Goldberg $2.5 million.
A Wells Fargo spokesman told the Wall Street Journal that the bank disagrees “with the claims regarding fees owed to the firm” and said other allegations in the suit “should not be viewed as credible.”