Vincent Howard and our Loma Linda foreclosure defense attorneys were interested to see a case about a failed bid to exclude foreclosure fees from the total payment required to stop a foreclosure. We have written here several times about the practice of including questionable or undisclosed foreclosure fees in bankruptcies--or not including them, then hitting the filers with undisclosed fees after they emerge from bankruptcy. In Kuretich v. Alaska Trustee Inc., homeowner Timothy Kuretich Sr. challenged the practice of including foreclosure fees in the amount needed to redeem a property headed for foreclosure--that is, the price required to halt the foreclosure. The Alaska Supreme Court ultimately declined to stop the practice.
Kuretich fell behind on his mortgage payments in 2008, but redeemed the property. When it happened again in 2009, he talked to a foreclosure lawyer before requesting the reinstatement amount. This time, he brought suit filed the lawsuit seeking a declaratory judgment, which is a court order, saying that including foreclosure fees in the reinstatement amount violated Alaska's non-judicial foreclosure statute, federal law and the Alaska Unfair Trade Practices and Consumer Protection Act. The trial court granted a preliminary injunction, and Kureitch was able to modify his loan, ending the foreclosure. However, the declaratory judgment suit continued and the court found for Alaska Trustee Inc. in 2010. Kuretich appealed.
The Alaska Supreme Court ultimately affirmed the judgment, finding the state non-judicial foreclosure statute permitted the fees. Kuretich alleged that the statute only permitted Alaska Trustee to include sums "in default," which under his reading did not include foreclosure fees. The only previous case to address that area of the statute was Hagberg v. Alaska National Bank, which found that an amendment to the reinstatement rules did not violate the contracts clause of the state constitution. In that 1978 case, the court reasoned that because reinstatement's purpose is to put the lender and borrower back into the same positions they were in before the default, reinstatement affected only the lender's ability to accelerate the loan, not the loan's value. In this case, the high court said, the trial court correctly reasoned that the foreclosure fees were necessary to preserve the value of the lender's rights. Furthermore, the court reasoned, the law defers to the terms and conditions of the contract between the parties, and thus permits the foreclosure fees.
Vincent Howard and our Costa Mesa foreclosure defense lawyers frequently represent people who are hit with these fees right when they can least afford them. That's why we sympathize with Kuretich's efforts to avoid the fees. Foreclosure fees are essentially pure profit for loan servicers and lenders. But by the same token, they are assessed against people who are already in financial trouble and may barely be able to scrape together the payment necessary to get out of foreclosure. Unfortunately, people in foreclosure are not in a good position to negotiate these fees; this is not an area where free-market competition provides meaningful options. That's why, at Howard Law, our Yucaipa foreclosure defense attorneys prefer to fight foreclosures as early as possible, before homeowners can be hit with high fees that are hard to challenge.
If you're in default on your mortgage, or expect to be there soon, and you would like to talk to Vincent Howard and our experienced foreclosure defense team, don't wait to call Howard Law, P.C. You can send us an email or call toll-free at 1-800-872-5925.