Exhibit from the Harris Case SFF published in 3/2010:
Excerpts from complaint:
1. This case involves the undisclosed kickback/sharing of bankruptcy creditor attorney fees to a non-law firm corporate entity.
2. Mortgage servicers routinely appear in this Court seeking relief from the automatic stay or in opposition to proposed chapter 13 plans. The Mortgage servicers appear through counsel who announce their appearance on behalf of those mortgage servicers.
3. But, unbeknownst to this Court, those counsel often answer not to the mortgage
servicers on whose behalf they appear, rather these counsel answer to an undisclosed
middleman such as the Defendants.
4. Defendants provide what is known in the mortgage-servicing industry as default
servicing. Loans which are subject to default servicing include loans which may be
subject to foreclosure and loans which are in bankruptcy.
5. Some of the services which are provided by default servicers such as the Defendants
include: 1) executing documents on behalf of the original servicer; 2) ordering and
providing broker price opinions; 3) track and provide fees for payoffs and
refinancings, and; 4) provide centralized billing to vendors.
6. An additional function of default servicing is the identification and retention of legal
services which may be necessary for any particular mortgage in default, e.g. noticing
and posting a property for foreclosure or seeking relief from the automatic stay in a
7. In managing the performance of the legal services for their mortgage servicing
clients, Defendants require law firms to execute a “Network Agreement,” which
details the agreement for services between the Defendants and the particular law firm.
8. The claims covered in this Complaint relate to the illegal fixing of fees in the
bankruptcy context and the requirement that law firms that execute the “Network
Agreement” to kickback a contractual prearranged fixed portion of their attorney fees
to the Defendant.
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