The bankruptcy judges in Kansas have approved new language for all chapter 13 confirmation orders that will put an end to the abusive practice of secretly adding fees to a debtor’s mortgage loan balance.
No real estate creditor shall ever assess, charge or collect, from either the debtor or the real estate collateral, any assessments, fees, costs, expenses or any other monetary amounts, exclusive of principal, interest, taxes and insurance, that arose from the date of the filing of the bankruptcy petition to the entry of the Order of Discharge except as may be allowed by court order or an allowed proof of claim.
Mortgage companies will no longer be able to add attorneys fees and other unapproved fees to a chapter 13 debtor’s mortgage loan without disclosing the fees to the bankruptcy court. Debtors will be given the chance to dispute the fees while the bankruptcy case is active. The order is designed to force the lender to get court approval of all fees and end the abusive practice of presenting a bill for “unpaid fees” after the bankruptcy case is over, some times years later, when the borrower goes to refinance his loan or sell his home.
Read more about phony fees being added to mortgages on the Bankruptcy Law Network by Michael Doan and on the Mortgage Law Network by Jonathan Ginsberg
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[...] This case contains a discussion of the various issues that are to be considered by court and counsel in the context of a 2016 application by a creditor. This same issues present themselves in proofs of claim issues pertaining to attorney fees. [...]