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Two Biggest Colorado Foreclosure Firms Charged with Fraud

The Attorney General of Colorado has sued the two largest foreclosure law firms in the state for fraud stemming from violations of the state’s various consumer protection and debt collection laws.

In separate court filings, the Attorney General’s Consumer Protection Section charged The Castle Law Group as well as Aronowitz & Mecklenburg with conspiring to charge fraudulent and inflated costs for the posting of two notices on the homes of borrowers facing foreclosure as required by law.

The complaints also accuse the firms of improperly tacking on additional fees as “costs” for tasks already compensated by the maximum fee allowable by law.

“These lawsuits come at the end of a lengthy and exhaustive investigation into allegedly fraudulent billing practices by these firms that inflated foreclosure costs,” said Attorney General John Suthers.

“These inflated costs were passed on to homeowners trying to save their homes from foreclosure, successful bidders for properties at foreclosure sales, and to investors and taxpayers. The facts uncovered by our investigation are very disturbing and, frankly, reflect poorly on the legal profession.”

The suits allege that combined the law firms handled more than 150,000 foreclosures in Colorado since 2006 and overcharged by as much as $650 for each.

Although Aronowitz admitted to no wrongdoing, the firm agreed to enter a consent to judgment with the court, effectively settling all claims. Aronowitz agreed to pay $10 million in penalties and to have no ownership interest in any business engaged in foreclosure-related work in the state for nine years according to a consent judgment filed with the court.

Attorneys for Castle did not immediately respond to requests for comment but it appears that Castle has not agreed to settle at this time.

About Author: Derek Templeton

Derek Templeton is an attorney based in Dallas, Texas. He practices in the areas of real estate, financial services, and general corporate transactional law. His experience includes time as an Attorney Adviser for the U.S. Small Business Administration and as General Counsel for a nonprofit organization in Dallas. A self-avowed "policy junkie," he has a keen interest in the effect that evolving federal policy has on the mortgage, default servicing, and greater housing industries.

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