Foreclosing Bank Denied Legal Fees and Costs

In a foreclosure, a plaintiff cannot recover counsel fees against a homeowner or borrower in foreclosure actions prior to filing the foreclosure complaint.  

A recent decision has been rendered by the Appellate Division clarifying when a foreclosing plaintiff can recover counsel fees in a foreclosure action.  

The New Jersey Appellate Division of the Superior Court ruled that the Fair Foreclosure Act which references the New Jersey Rules is a specific limitation on the amount of attorney’s fees a lender can recover.   New Jersey court rules bar the recovery of any amount of attorneys fees unless a Court rule expressly permits those fees.   It was clear to the Court that attorney’s fees to the lender are permitted only when the lender actually files a foreclosure complaint and not before.   The case is significant because in many instances lenders will impose counsel fees and costs incurred prior to the filing of a foreclosure complaint.   This practice has been seldom challenged but with this decision, lenders will no longer be able to charge counsel fees as a condition to reinstating the mortgage unless it has filed a complaint and then has agreed to settle with the defaulting borrower.

For more information contact Bonnie Wright, Esq. at bwright@hnwlaw.com/

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