Jacksonville, Florida-based Fidelity National Information Services has been named in a Houston lawsuit filed by two Chapter 13 debtors, and all other debtors, who allege the giant processor of financial and mortgage-related services tacked on “hidden legal fees” while serving as an intermediary between the debtors’ mortgage servicing companies and the law firms appearing in court on the creditors’ behalf.
The lawsuit, which was filed by a Houston couple—Ernest and Mattie Harris—alleges Fidelity charged the Harrises and other Chapter 13 debtors “hidden fees” by using its own network of attorneys and cloaking its role as the secret middle-man between the law firms handling the cases and the creditors sending Fidelity’s network of attorneys to court on their behalf.
The suit alleges the relationship became a complex game of who’s who in which fees allegedly were tacked onto the debtors’ payments without Fidelity’s role as the legal fee decision-maker becoming known to the courts in the process.
“In reality, the Defendants (Fidelity) are merely middlemen who, in effect, sell the legal business of their mortgage-servicing customers, and secretly control and direct counsel who appear on behalf of these mortgage-servicer customers,” the lawsuit contends.
The suit goes on to say that Fidelity through clients, like the Harrises’ mortgage servicer Saxon Mortgage Services Inc., remains at odds with statutes banning certain pre-arranged legal fees, as well as mandates that prohibit the splitting of legal fees with entities that cannot serve in the capacity of legal counsel.

“In fact, Fidelity’s ‘comprehensive’ role is really that of secret puppetmaster of the law firms that appear in this court on behalf of mortgage servicing lenders,” the suit contends. “These law firms (in the Harrises’ case, Mann & Stevens, P.C.) collect their fees by tendering their bills through Fidelity and then on to the mortgage servicer—in this case Saxon, which then charge debtors, like the Harrises, without ever obtaining this Court’s approval.”
The lawsuit elaborates even further saying, “Saxon (the Harrises’ mortgage company) either obtains cash payments of these fees or adds the indebtedness to debtor accounts. The debtors often only become aware of this years later, typically when they sell their home or refinance, only to discover an extra few hundred or thousand dollars required to release this lien.”
The class-action suit claims Fidelity’s network of law firms are charging fees inflated by 25 to 50-percent when dealing with Chapter 13 cases. The suit also says, “The law firms, like Mann & Stevens, P.C., kick back the extra to Fidelity as part of Fidelity’s nationwide ‘Network Agreement’ governing its relationships with these law firms.” The plaintiffs concluded that through this relationship, “Fidelity keeps its role, as well as the kickback, hidden from the courts as a matter of systematic policy.”
Fidelity, in a press statement, denied the inappropriateness of the transactions.
“Lenders and servicers use FFS’ technology to efficiently manage foreclosures, bankruptcies and related matters on an outsourced basis,” Fidelity said. “This customized system allows them to communicate with law firms, provide direction, supply supporting documentation, transmit instructions, relay real-time loan level information and establish fee schedules. While the lender or servicer establishes the fee schedules, they are typically based upon guidelines published by Fannie Mae, Freddie Mac, the FHA and the VA.”
 
The company’s statement went on to say, “The allegations in this complaint, although serious, are devoid of merit and uniformly mischaracterize the outsourcing model employed by FFS. Moreover, it disregards fundamental legal concepts, misquotes applicable law, and attempts to collaterally attack rulings by other courts. FFS is eager for its day in Court.”