Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Taking 2nd Mortgage to Pay Foreclosure Defense Lawyer

For some Florida residents, the price of getting out of foreclosure will include taking on a second mortgage — payable this time to their lawyers. 

“We’re not money lenders,” said Peter Ticktin, a foreclosure lawyer who devised a “pay later” plan for troubled homeowners.

Thomas Ice and other foreclosure lawyers in Florida typically receive a few hundred dollars a month from each client.

The new mortgage, which takes effect only if the foreclosure is dismissed and the homeowner’s debt to the bank is reduced, is controversial among defense lawyers, some of whom call it “creepy” and “crass.” Yet even they acknowledge it offers a solution to a vexing question: How do they get paid?

After recent revelations that banks were sloppy in processing many foreclosures and in some cases lack standing to seize a house, potential clients seeking to challenge their lenders are flocking to lawyers. But while these distressed homeowners might have a case, they generally lack the resources to pay legal fees. Being in foreclosure usually means being broke.

“We thought, ‘Why don’t we use a bit of ingenuity to find an affordable way to represent them?’ ” said Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Fla. “It’s a new model, a new paradigm.”

Foreclosure defense is a new legal specialty whose strategies and techniques are still being worked out. Mr. Ticktin, who has some 3,000 foreclosure clients, says his plan to collect fees by taking another mortgage on his clients’ properties has already been copied by other firms.

The Ticktin mortgages resemble the loans that the clients originally got from Countrywide, GMAC and other lenders. Each will be a contractual obligation with the law firm, labeled as a mortgage and structured like one, too, with the client paying a certain sum every month and using the house as collateral.

Unconventional payment structures are becoming popular in the foreclosure hotbed of Florida. Whether they yet have caught on elsewhere is unclear. Certainly, Mr. Ticktin is far from the only lawyer being forced to innovate.

“We can put in $100,000 of our time but over the length of a case be paid only $6,000 in monthly fees,” said Thomas E. Ice of Ice Legal in Royal Palm Beach.

Mr. Ice, Mr. Ticktin and many other Florida foreclosure lawyers typically receive a few hundred dollars a month from each client. To supplement that, they seek legal fees from the banks they successfully challenge as well as contingency fees.

Contingency fees are standard in cases in which the client has little money but there is the possibility of a large payout. A slip and fall on a store’s wet floor or a medical malpractice claim are classic contingency cases. If the plaintiff wins, insurance companies ultimately foot the bill.

In foreclosure cases, however, the client pays the contingency fee. While such an approach is sometimes used in commercial litigation, this is a first for consumer cases, said Lester Brickman, a professor at Cardozo Law School in New York.

“For a lawyer to supplement or replace the banks as a long-term mortgage creditor of homeowners leaves me a little queasy,” said Mr. Brickman, an expert on contingency fees. “It’s an invitation for the public to say, ‘There go the lawyers again.’ ”

If the Ticktin lawyers — there are 19 now and will be two more soon — cause the original mortgage to be nullified or reduced because of the bank’s misdeeds, the client must take out a new mortgage for 40 percent of the savings.

For instance, if the mortgage was $500,000 and is reduced by the bank to $200,000, the client would owe Ticktin 40 percent of $300,000, or $120,000, minus any legal fees paid by the losing bank as well as any monthly sums paid to the law firm.

Clients would be attracted to this arrangement because they might save nearly $200,000 and avoid foreclosure. They can either stay in their house or — after another legal hurdle — sell it.

Mr. Ticktin conceded there were potential problems with this “pay later” plan, starting with the uncertainty over whether the clients could and would pay the debt over a period of many years and what Mr. Ticktin’s response would be if they did not.

We would never enforce the mortgage and foreclose,” he said. “We’re not in that end of the game. We’re not money lenders. We’re charging a small amount of interest” — four percent — “just to make it legal.”

For any of this to happen, of course, he has to win his cases. Successful foreclosure litigation can take years, and even if the banks are under fire few believe they will go out of their way to make it any easier. But even if people in foreclosure never win a settlement from a bank, they could stay a few more months in their homes by filing a lawsuit.

The Ticktin firm is growing rapidly, adding three clients a day. If all 3,000 clients ended with mortgages payable to the firm, Mr. Ticktin said, “that would be wonderful, but realistically I’m expecting fewer.”

So far, he said, he has mortgages on the homes of five clients. None were available for comment.

Other lawyers said they were still puzzling over how to proceed. Roy Oppenheim is a veteran foreclosure defense lawyer, which means he has been doing it two years.

“Until recently, foreclosure defense would have been considered the lowest of the low — below the divorce guys, below ambulance chasers,” said Mr. Oppenheim, who practices in Weston, Fla. “The idea was inconceivable that you might have legitimate defenses when your client did not pay the bank that had lent them a sum of money.”

Then foreclosure lawyers started deposing bank employees, who admitted that their behavior in preparing court documents was negligent. That was quickly followed this fall by freezes imposed by some of the lenders. All 50 state attorneys general have joined forces to investigate and reshape banks’ foreclosure practices.

Mr. Oppenheim now has 500 clients, twice as many as a year ago, all whom are paying $500 a month. “I’m happy and thrilled to wake up in the morning and be a real estate attorney in Florida,” he said. “We’re starting to look at what the definition of exemplary representation would be.” That would allow them to charge higher fees.

Some foreclosure lawyers have a more traditional approach, starting with a firm grip on clients’ expectations.

“Any time someone calls me and says, ‘I want to keep the house and get my mortgage gone,’ I say, ‘That’s not realistic or fair,’ ” said Margery E. Golant of Boca Raton, a former executive at the lender Ocwen.

She takes foreclosure clients who can afford to pay as they go; there are a few. “I don’t want to be my client’s creditor,” she said. “I want to be on their side.”

Counting on clients to shoulder a large legal bill after the case is over can be fraught with conflicts, said Mr. Ice, the Royal Palm Beach lawyer.

In some cases, he said, the best a client might be able to do was get a mortgage modification. But the client might reject a bank’s offer if it did not allow him enough every month to pay Mr. Ice as well.

“It’s touchy,” the lawyer said. “I don’t ever want to have a client say, ‘I’m not taking the deal because I can’t afford to pay you.’ ”

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PAYING A LAWYER

M. Stoppa Esq. blog

The New York Times did a story over the weekend about how Florida foreclosure attorneys are charging homeowners facing foreclosure.  I’ve read the article and, with respect to my colleagues, I’m disturbed.  According to the article, Roy Oppenheim charges $500/month to his clients (every month the case is pending, no matter how little activity takes place in the case each month).  Ice Legal charges a retainer, monthly fees, and a contingent fee.  Peter Ticktin charges monthly fees plus a 40% contingent fee.  As I see it, instead of trying to make their services as affordable as possible, these lawyers are trying to figure out how much they can get away with billing.  I’m also troubled at the ethical quagmires created by these fee arrangements.   

To illustrate my concerns, let’s take one of the examples in the article.  If a client of the Ticktin lawyers gets the principal on his/her mortgage reduced from $500,000 to $200,000 (be it by modification, settlement, court order, or the like), then that homeowner owes the Ticktins $120,000 ($300,000 x 40% = $120,000).  Perhaps worse yet, that $120,000 is secured by a mortgage on the client’s home.  Hence, the $500,000 mortgage is reduced to $200,000, but there is now a second mortgage, payable to Ticktin, in the amount of $120,000, so the homeowner still owes $320,000.   

Respectfully, isn’t it our job as foreclosure defense and bankruptcy attorneys to help homeowners avoid foreclosure?  To try to reduce their debt?  I realize this is a business, but I can’t help but feel that these fees are excessive.  As I see it, why should Ticktin, Ice Legal, Stopa Law Firm, or any foreclosure defense attorney get a windfall if we’ve helped a client and obtained a principal reduction?  Striving for favorable results is our job - it’s why we get paid.  Sometimes favorable outcomes happen, sometimes they don’t, but either way, we shouldn’t get a windfall, particularly at the expense of our clients.  

I’d be less disturbed about foreclosure lawyers charging a contingent fee if it was the lawyers’ only way of billing.  For instance, if a lawyer somehow eliminates a mortgage from a client’s home, and hasn’t collected any fees, a contingent fee seems reasonable to me.  In that scenario, the client now has a free and clear house and the lawyer helped obtain that result without getting paid, so a contingent fee seems fair.  Unfortunately, there are two fatal problems with this line of thinking.  First, it’s clear that these lawyers are charging more than just a contingent fee - they’re charging retainers and monthly fees, too.  When the foreclosure defense attorneys are already getting a monthly fee, the contingent fee strikes me as excessive.  My concerns are heightened in that regard because I find the $500 monthly fee excessive on its own.  Bear in mind, in foreclosure cases, there are often many months of inactivity, where the lawyer does little or no work.  As I see it, why should a lawyer keep collecting $500/month when he/she isn’t doing any work?  I strongly believe the fees a foreclosure lawyer collects should bear some reasonable relationship to the work being performed. 

Second, I agree with Margery Gallant, who opines in the article that the elimination of a mortgage and client owning a home free and clear is generally not “realistic.”  There are undoubtedly exceptions, but the typical homeowner cannot expect that he/she can march into court and convince a judge to eliminate a mortgage and give the homeowner a free home.  Don’t get me wrong – I’m always on the lookout for fact patterns that could lend themselves to this result.  For the typical Floridian, though, this is not a realistic goal (especially with the climate in the judiciary being what it is).  As such, I’m left wondering just what these foreclosure defense attorneys have to do to earn their contingent fee. 

For example, suppose the foreclosure lawsuit is dismissed without prejudice, meaning the bank can re-file a separate suit and seek foreclosure.  Should a foreclosure defense attorney be able to collect a contingent fee in that scenario?  I’d argue “no,” unless the fee was very low.  After all, the fees obtained should be commensurate with the results obtained, and a dismissal without prejudice does not lend itself to a $50,000 or $100,000 contingency.   Unfortunately, I’ve seen contingent fee agreements that require such a payment even upon a dismissal without prejudice.  As I see it, that’s grossly excessive. 

Also, I strongly believe these fee arrangements are rife with conflicts.  To illustrate, Tom Ice says he “doesn’t ever want to have a client say ‘I’m not taking the deal because I can’t afford to pay you.”  Yet isn’t this the very dynamic that these contingent fees create?  Using the example above, if the homeowner is offered a $300,000 reduction, doesn’t he/she have to think about whether he/she can pay the $120,000 mortgage to Ticktin before accepting the offer?  If so, who is going to counsel the homeowner about that?  Ticktin?  How does that conversation go? “I’m glad you’ve been offered the $300,000 reduction – just be sure you can pay the $120,000 fee to me.”  

Mr. Ticktin says he “would never enforce the mortgage and foreclose.”  If that’s true, though, then why have this fee agreement in the first place?  Clearly, these lawyers want to leave open the possibility of foreclosing on their clients’ homes, as otherwise they wouldn’t be including such language in their fee agreements. 

Also, many homeowners facing foreclosure are candidates for bankruptcy.  Using the same example, above, are the Ticktin lawyers going to give conflict-free advice to a client about bankruptcy if Ticktin has a second mortgage on the client’s home?  How can they?  Ticktin and the homeowner are directly adverse – the homeowner wants to eliminate the mortgage, which could happen via bankruptcy, whereas Ticktin wants to enforce it, which a bankruptcy would preclude.  Undoubtedly, Ticktin’s representation to that client about the benefits of bankruptcy are impacted by its own interests in keeping the mortgage intact. 

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Kudos, Mr. Stoppa.

This practice is wrong and, IMHO, unethical.  The homeowners are being fleeced at every turn.  This is the very reason why most homeowners choose to take their chances and defend their cases pro se.  There are very few people that the homeowner can believe and trust.
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anon

This is weird. I feel for the poor struggling attorneys but hey just kinda lost respect for Mr. Ice and Mr. Ticktin

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abundance
FL (LEE COUNTY) & VIRGINIA (CHESAPEAKE) LOST BOTH PROPERTIES
SEEKING FOR ATTORNEYS WHO WILL TAKE THESE CASES ON CONTINGENCY BASES.
MY HUSBAND IS RETIRED US NAVY, WE ARE HOMELESS LIVING WITH RELATIVES IN VIRGINIA.
VIRGINIA PROPERTY- FORECLOSED 12/5/2008 DEED OF TRUST HAS MERS AS BOTH NOMINEE AND BENEFICIARY. APPOINT OF SUB TRUSTEE DOCUMENT FILED AFTER FORECLOSURE- PREPARED BY SERVICERS ATTORNEY IN VA, SIGNOR VP OF MERS, NOTARIZED BY STATE OF INDIANA NOTARY. TRUSTEES DEED DOCUMENT SAYS FANNIE MAE AND AURORA.

FLORIDA PROPERTY- MORTGAGE DOCUMENT THAT I RECEIVED AT CLOSING STATES MERS AS A MORTGAGEE AND NOMINEE.

ON JUNE, 2009 I HIRED AN ATTORNEY WHO ASSURED ME HE IS KNOWLEDAGABLE WHILE PAYING HIM HIS FEES LENDERS TOOK BOTH MY PROPERTY WHILE I WAS ON VACATION.  FORMER ATTORNEY DID ABSOLUTELY NOTHING TO THE CASE.  ON 2/2011, I THEN FILED A COMPLAINT AT D.C. BAR ASSOCIATION WHERE MY FORMER ATTORNEY WAS LOCATED. AS OF 11/2011 FORMER ATTORNEY IS DISBARRED FOR 5 YEARS ON MISCONDUCT AND GROSS NEGLIENCE.

BOTH PROPERTIES WAS SOLD ON 6/2010.

I AM SEEKING FOR DAMAGES.  PLEASE HELP 
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Unregistered
After hiring a lawyer, Homeowner should follow up closely his/her case.

1.  Ask the lawyer his e-mail. It is best to communicate with the lawyer by emails so you have written records. Lawyer secretary sometimes forgot to give him messages. If the lawyer does not reply to your email, resend the email . If it is urgent, email then call then go to his office.  If possible, ask the lawyer his cel number.

Before hiring a lawyer, check his record at the Bar website to make sure he is licensed to practice law in your state and if there is any complaint against him.

2. Check your case docket online EVERY DAY. There is a deadline to reply to a motion or file an answer  (usually 10 days or so unless ordered a timeline by the Judge). Send email asking for copy of pleadings, motions from both sides  and make sure the lawyer respond on time to the motions/pleadings. If possible, ask the lawyer to email you the pleadings for you to review before filing.

3.  Read carefully all your case documents. If the lawyer's office failed to provide you pleadings copies, go to the court house , check your case and make copies for your own file.

4.  If the lawyer fails to file responsive pleadings to the Bank, go to his office and ask to see him pronto for explanation. If he does not take time to see you, call the Lawyer Bar Association . They will tell you the procedure to follow.

5.  If the lawyer failed to file pleading on time, take your case documents to go see another lawyer. Don't wait until it is too late i.e Default Judgment entered or the house is sold.

6.  It is not wise to hire a lawyer for a foreclosure case then just leave it to him. After all, it's your house, your case. You know your case details more than anyone else. Participate actively in the action of defending your house to increase your chance of winning.
Educate yourself about foreclosure, read all news , legal cases about foreclosure at  Legal Lounge at http://www.msfraud.org. Check the docket online or best check it at the court house to see if any pleadings filed by the Bank and make sure your lawyer is working on it. Some court houses are so overwhelmed that the online docket is updated with  days or weeks delay.  

Just my 2 cents.
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