MORE MONEY STOLEN BY PUBLIC TRUSTEE FROM HOMEOWNERS
Denver public trustee overcharged homeowners in foreclosure cases
For years, Denver’s public trustee intentionally overcharged hundreds of homeowners paying to clear up foreclosure cases — then sent the overages to the banks and lenders that initiated the foreclosures rather than refund the money, The Denver Post has found.
With the goal of ensuring that the public trustee’s costs of processing a foreclosure were paid, the trustee tacked onto the bottom line a flat fee of $800 that homeowners were told they needed to pay if they wanted to stop a foreclosure.
If they didn’t pay, the foreclosure process would continue, and the homeowner risked losing the property.
Then, once the trustee calculated the actual costs, often a quarter of what was demanded, the extra money was sent to the lawyers on behalf of the banks they represented, The Post found.
The public trustee’s office said it did this because it believed the overcharges would be automatically refunded. They weren’t.
Instead, it appears some lenders might have applied those funds — amounts that foreclosure documents show typically topped $500 — to the homeowner’s mortgage balance without first asking whether that was the owner’s preference.
Some homeowners affected by the practice told The Post they couldn’t recall getting a credit or, after recently reviewing their mortgage-payment records, couldn’t find one.
Lenders and the lawyers who represent them refused to comment for this story, although one bank that did check when asked to by The Post said the amount was credited to the homeowner’s mortgage balance instead of being refunded.
“I had to borrow money to catch up,” said Evasly Figaro, a 55-year-old construction pipe fitter whose seasonal work made for hard times last year. He paid $13,111.98 to cure the foreclosure on his Green Valley Ranch home in northeast Denver. The trustee overcharged him by $502, records show.
“I had to pay it all to get my house back,” he said. “I could certainly use that money now. It’s mine, isn’t it? Work is steady, but I’m still catching up.”
More than 900 foreclosures in Denver have been cured by homeowners since 2008, public-trustee records show, and estimates are that they overpaid by about $455,000 for fees improperly assessed by the public trustee.
The Post also found that another public trustee — for Boulder County — has a similar practice of forwarding overpayments to lawyers and lenders rather than refunding to the homeowner directly.
In Boulder’s case, county foreclosure documents show the overpayments were from publication costs — each foreclosure notice must be printed in a newspaper a certain number of times — that were charged to the homeowner but later canceled when the homeowner paid to stop the foreclosure.
Denver and Boulder county public trustees said they immediately stopped their practice after The Denver Post’s inquiry, each saying it had been an unintended oversight.
“Our past practice of relying on the lender to sort out overages in public-trustee fee payments should not have occurred,” said Nancy Reubert, spokeswoman for Denver Clerk and Recorder Debra Johnson, who has been the city’s public trustee since July 2011. “Once brought to Johnson’s attention, she changed the procedure, and we now administer overage refunds in-house.”
The overcharges were for costs incurred by the public trustee — for such things as publication of a foreclosure notice, court and electronic filing fees, and processing expenses.
The amount is tacked onto the bill lawyers are asked to generate when a homeowner wants to cure a foreclosure, an amount that includes unpaid mortgage payments, interest, attorney fees and other expenses.
While most public trustees charge the exact amount a homeowner owes, records show that Denver charged $800, then worked out the actual cost later. Whatever was left over was sent to the lender in a check whose amount included lawyer and bank charges to settle up the foreclosure.
Denver’s practice began in 2008 in response to the high volume of foreclosures, Reubert said. Records show there were 6,145 foreclosures filed that year, the second-highest number in the city’s history. The most — 8,240 — were filed the year before. If the fees were not fully paid, as sometimes happened, the city’s general fund had to make up the difference, although it’s unclear today to what extent that happened.
“These people are already under the gun enough, at the place in their lives where they are faced with paying or losing their home,” said Corrine Fowler, economic-justice director at the Colorado Progressive Coalition. “It’s absolutely ridiculous that this was happening.”
Aurora’s public trustee also overcharges homeowners who want to cure a foreclosure — $600, according to documents — but issues refunds within a week of the cure payment.
Boulder County Public Trustee Paul Weissman, one of five appointed by Gov. John Hickenlooper in 2012 after the ouster of several trustees statewide found to have misused their offices, said changes were to be immediate.
“I’m not sure why we have been doing it the way we have,” he said in an e-mail. “I have gone through the files looking for people who were affected over the last year (and then will go back further) to make sure they know there is money that should somehow be credited to them, but was sent to the lender.”
Public trustees are the impartial administrators of the state’s foreclosure system, which is unique in the nation. Each county has a public trustee, typically its elected treasurer, although 10 are appointed by the governor — in Adams, Arapahoe, Boulder, Douglas, El Paso, Jefferson, Larimer, Mesa, Weld and Pueblo counties. Broomfield County’s trustee is appointed by the county commission, and Denver’s is its elected clerk and recorder.
The overcharges are the latest in a string of revelations into foreclosure billings that began when an investigation by Attorney General John Suthers’ office into alleged expense-padding by foreclosure lawyers became public.
The Post followed up with its own investigation that last week exposed how foreclosure lawyers sometimes charge homeowners for lawsuits that are never filed.
The state’s public-trustee process is more than a century old and, despite recent legislative efforts at fixing it, remains largely unchanged.
“Nobody ever asked me if I wanted the money back,” said Figaro, the pipe fitter who, records show, was also forced to pay $325 for a nonexistent lawsuit against him, along with the public-trustee charges.
“I would think I had that right,” he said..
David Migoya: 303-954-1506,
Denver public trustee overcharged homeowners in foreclosure cases
For years, Denver’s public trustee intentionally overcharged hundreds of homeowners paying to clear up foreclosure cases — then sent the overages to the banks and lenders that initiated the foreclosures rather than refund the money, The Denver Post has found.
With the goal of ensuring that the public trustee’s costs of processing a foreclosure were paid, the trustee tacked onto the bottom line a flat fee of $800 that homeowners were told they needed to pay if they wanted to stop a foreclosure.
If they didn’t pay, the foreclosure process would continue, and the homeowner risked losing the property.
Then, once the trustee calculated the actual costs, often a quarter of what was demanded, the extra money was sent to the lawyers on behalf of the banks they represented, The Post found.
The public trustee’s office said it did this because it believed the overcharges would be automatically refunded. They weren’t.
Instead, it appears some lenders might have applied those funds — amounts that foreclosure documents show typically topped $500 — to the homeowner’s mortgage balance without first asking whether that was the owner’s preference.
Some homeowners affected by the practice told The Post they couldn’t recall getting a credit or, after recently reviewing their mortgage-payment records, couldn’t find one.
Lenders and the lawyers who represent them refused to comment for this story, although one bank that did check when asked to by The Post said the amount was credited to the homeowner’s mortgage balance instead of being refunded.
“I had to borrow money to catch up,” said Evasly Figaro, a 55-year-old construction pipe fitter whose seasonal work made for hard times last year. He paid $13,111.98 to cure the foreclosure on his Green Valley Ranch home in northeast Denver. The trustee overcharged him by $502, records show.
“I had to pay it all to get my house back,” he said. “I could certainly use that money now. It’s mine, isn’t it? Work is steady, but I’m still catching up.”
More than 900 foreclosures in Denver have been cured by homeowners since 2008, public-trustee records show, and estimates are that they overpaid by about $455,000 for fees improperly assessed by the public trustee.
The Post also found that another public trustee — for Boulder County — has a similar practice of forwarding overpayments to lawyers and lenders rather than refunding to the homeowner directly.
In Boulder’s case, county foreclosure documents show the overpayments were from publication costs — each foreclosure notice must be printed in a newspaper a certain number of times — that were charged to the homeowner but later canceled when the homeowner paid to stop the foreclosure.
Denver and Boulder county public trustees said they immediately stopped their practice after The Denver Post’s inquiry, each saying it had been an unintended oversight.
“Our past practice of relying on the lender to sort out overages in public-trustee fee payments should not have occurred,” said Nancy Reubert, spokeswoman for Denver Clerk and Recorder Debra Johnson, who has been the city’s public trustee since July 2011. “Once brought to Johnson’s attention, she changed the procedure, and we now administer overage refunds in-house.”
The overcharges were for costs incurred by the public trustee — for such things as publication of a foreclosure notice, court and electronic filing fees, and processing expenses.
The amount is tacked onto the bill lawyers are asked to generate when a homeowner wants to cure a foreclosure, an amount that includes unpaid mortgage payments, interest, attorney fees and other expenses.
While most public trustees charge the exact amount a homeowner owes, records show that Denver charged $800, then worked out the actual cost later. Whatever was left over was sent to the lender in a check whose amount included lawyer and bank charges to settle up the foreclosure.
Denver’s practice began in 2008 in response to the high volume of foreclosures, Reubert said. Records show there were 6,145 foreclosures filed that year, the second-highest number in the city’s history. The most — 8,240 — were filed the year before. If the fees were not fully paid, as sometimes happened, the city’s general fund had to make up the difference, although it’s unclear today to what extent that happened.
“These people are already under the gun enough, at the place in their lives where they are faced with paying or losing their home,” said Corrine Fowler, economic-justice director at the Colorado Progressive Coalition. “It’s absolutely ridiculous that this was happening.”
Aurora’s public trustee also overcharges homeowners who want to cure a foreclosure — $600, according to documents — but issues refunds within a week of the cure payment.
Boulder County Public Trustee Paul Weissman, one of five appointed by Gov. John Hickenlooper in 2012 after the ouster of several trustees statewide found to have misused their offices, said changes were to be immediate.
“I’m not sure why we have been doing it the way we have,” he said in an e-mail. “I have gone through the files looking for people who were affected over the last year (and then will go back further) to make sure they know there is money that should somehow be credited to them, but was sent to the lender.”
Public trustees are the impartial administrators of the state’s foreclosure system, which is unique in the nation. Each county has a public trustee, typically its elected treasurer, although 10 are appointed by the governor — in Adams, Arapahoe, Boulder, Douglas, El Paso, Jefferson, Larimer, Mesa, Weld and Pueblo counties. Broomfield County’s trustee is appointed by the county commission, and Denver’s is its elected clerk and recorder.
The overcharges are the latest in a string of revelations into foreclosure billings that began when an investigation by Attorney General John Suthers’ office into alleged expense-padding by foreclosure lawyers became public.
The Post followed up with its own investigation that last week exposed how foreclosure lawyers sometimes charge homeowners for lawsuits that are never filed.
The state’s public-trustee process is more than a century old and, despite recent legislative efforts at fixing it, remains largely unchanged.
“Nobody ever asked me if I wanted the money back,” said Figaro, the pipe fitter who, records show, was also forced to pay $325 for a nonexistent lawsuit against him, along with the public-trustee charges.
“I would think I had that right,” he said..
David Migoya: 303-954-1506,