NEWS ANALYSIS: CT Marshals Overcharged Borrowers For Process Serving, AG Says

Written by John Clapp
on September 22, 2009 No Comments
Categories : From The Orb

State marshals in Connecticut overcharged homeowners for delivery of certain foreclosure documents, according to a formal legal opinion issued by state Attorney General Richard Blumenthal.

Blumenthal's investigation, which is ongoing, has found that state marshals charged borrowers separately for serving initial foreclosure complaints and for serving lis pendens notices, which explain that foreclosure action is pending.

‘Piling unlawful fees on property owners facing foreclosure adds both insult and injury," Blumenthal said in a press statement. "Multiple fees for a single service are illegal – clearly contradicting legislative intent and common sense.’

Lis pendens, Blumenthal's opinion concludes, is not even required to be served to homeowners – it is only required to be filed on land records. Connecticut statutes limit marshals' fees for serving foreclosure papers to $30 and prohibit them from charging a separate and additional fee for the lis pendens.

"There is no precedent and no authority for treating each separate document as a separate process and charging a fee for service of each," the legal opinion states.

In August, 1,594 lis pendens notices were filed in Connecticut, RealtyTrac's data show.

Blumenthal's legal opinion further concluded that marshals may not split fees or hire other marshals or non-marshals to serve legal documents. State marshals may share administrative costs as long as those costs are "apportioned to the actual work performed." They may also employ non-marshals, but only to perform clerical or administrative work.

Blumenthal said his office will take action if warranted.

He is also calling on the state marshal commission to stop this "possibly prevalent" practice and says the commission should "discipline marshals and order restitution to consumers if the commission finds marshals violated state law."

"If [marshals] have overcharged, they should pay back," Blumenthal told reporters during a press conference Monday. "Maybe they will voluntarily, now that they know what the rules are."

The state marshal commission has no comment on the matter, according to a woman answering the phone at the office of James E. Neil, the commission's director of operations.

In June, Blumenthal began investigating the structure of Connecticut's foreclosure attorney business. The investigation was based off of a Hartford Courant report from last year that found the bulk of the state's foreclosure legal work was performed by two law firms, Hunt Leibert and Bendett McHugh.

‘Concentrating service of mortgage foreclosure actions in a select few law firms and state marshals is not only potentially anti-competitive, but also anti-consumer,’ Blumenthal said at the time. According to the Courant, a "small group of state marshals led by John Fiorello" was given most of the two firms' process-serving work. In 2008, Fiorello's group was directed close to $3 million in business from the firms.

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