Extra Fees Paid by Homeowners Facing Foreclosure Listing

A study of over 100 court records around Connecticut showed that homeowners whose houses are at risk of being placed on foreclosure listing have paid unnecessary fees to marshals since 2007.

According to the study, a group of marshals who were chosen to serve foreclosure notices boosted their earnings by increasing payments for deliveries. The higher marshal fees came about when Connecticut’s foreclosure law firms, Bendett & McHugh and Hunt Leibert, secretly establish a private bookkeeping firm and required marshals to pay the company for every foreclosure lawsuit they served.

The study said that marshals who worked in the two law firms stood to lose about $500,000 annually due to payments to the bookkeeping firm, named Connecticut Service Network. The marshals decided to offset the costs of paying for the new company by upping their delivery fees.

A study of court records showed that marshals charged additional fees by as low as $20 and as much as $150 per foreclosure lawsuits. Following the increase in fees, the law firms filed nearly 30,000 foreclosure lawsuits before discontinuing the extra fees just recently.

The study noted significant fee increases among marshals who delivered foreclosure papers for Hunt Leibert. The law firm filed about 9,965 foreclosed home lawsuits in 2008.

Before 2007, marshals also delivered lis pendens, a lien document, to municipal clerk’s offices. They were paid $30 for every delivery. In March 2007, marshals working for Hunt Leibert started including copies of lie pendens with foreclosure documents they delivered to distressed homeowners.

Under Connecticut’s law, lis pendens should be given only to local clerks. For each document delivery, marshals billed as if two separate deliveries were made to each distressed homeowner. They collected $30 for delivering the foreclosure lawsuit and another $30 for lis pendens.

Meanwhile, marshals working for Bendett & McHugh also raised their charges for deliveries but not as much as those charged by marshals working for Hugh Leibert. According to court records, even before 2007, Bendett marshals delivered their lis pendens to defendants and not to the clerks’ office but they do not charge double for the delivery.

All that change in April 2007 when Bendett marshals started charging the maximum delivery fee for lis pendens.

Both the law firms of Hugh Leibert and Bendett & McHugh filed over 1,000 foreclosure lawsuits every month, with their marshals earning a combined $1 million in unnecessary delivery fees.