A lawsuit filed this week charges that First Union Corp. and its home equity unit misled consumers and used improper collection practices.

The suit, filed in U.S. federal court in Newark, N.J., on behalf of a couple in Sea Girt, N.J., claims that First Union failed to provide them with billing statements and that it concealed interest charges for more than 20 months.

The Charlotte, N.C., company also attempted to illegally charge attorney fees, late fees, and collection costs, and began foreclosure proceedings without any legal basis, court papers say.

Paul Grobman, an attorney representing the plaintiffs, said that damages would depend on the costs of the foreclosure process in New Jersey and statutory damages allowed under the Federal Truth in Lending Act and the Real Estate Settlement Practices Act.

Mr. Grobman said he suspects that First Union's actions "were not isolated" and said he is looking for others to join the class action.

"This is something we have reason to believe was done to more individuals than the class plaintiffs," he said. "Perhaps it's something that occurred to other people that got behind on their loans."

The complaint says First Union sought payment of unaccrued interest that was not disclosed in monthly statements to the borrowers. And, according to Mr. Grobman, it demanded loan payments that were higher than those indicated on the statements.

The plaintiffs say that when they tried to communicate with the bank, it did not respond to their inquiries, as is required by federal law. Instead, the complaint says, First Union started foreclosing on the couple's home and demanded attorney fees and costs.

Mr. Grobman said that First Union should be served with the lawsuit this week.

Company officials said they were aware of the suit but declined to comment.

To avoid such litigation, banks need to be extra-vigilant about snafus in their billings systems, observers said.

Larry Platt, an attorney at the Washington law firm Kirkpatrick & Lockhart, said, "You always want be on the high ground and do things properly."

In most instances, lenders "have a material slipup that provides a foundation" for a suit, he said. "The claim is a natural consequence of a failure to give a billing statement. This is a business where consumer complaints are rampant."

First Union has undergone major restructuring recently, including last year's shuttering of Money Store, the Sacramento, Calif., consumer finance company it bought in 1998.

The bank is now under new management and focused on building capital management and capital markets business.

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