Taking 2nd Mortgage to Pay the Foreclosure Lawyer

[jk]

Taking 2nd Mortgage to Pay the Foreclosure 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.

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.

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http://www.nytimes.com/2010/11/07/bu...awyers.html?hp

[GRG55]

Re: Taking 2nd Mortgage to Pay the Foreclosure Lawyer

Taking 2nd Mortgage to Pay the Foreclosure Lawyer


...

The American Dream?

[jk]

Re: Taking 2nd Mortgage to Pay the Foreclosure Lawyer

The American Dream?

it really incentivizes the foreclosure lawyer, doesn't it? not only does he have to win the case, he then has an interest in the home"owner" not falling back into arrears, as so many do. if there is ANOTHER foreclosure on the first mortgage, down the road, the lawyer loses his "fee" from the first, successfully defeated, foreclosure action.

[don]

Re: Taking 2nd Mortgage to Pay the Foreclosure Lawyer

The is one of those events that should be preserved, as was once said, in amber. It should prove the stuff plays, novels and screenplays are written from, that attempt to boil down and portray these dark daze of financial rule.

A few more choice quotes:

Foreclosure defense is a new legal specialty whose strategies and techniques are still being worked out. Mr. Ticktin (right out of Dickens), 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.

Unconventional payment structures are becoming popular in the foreclosure hotbed of Florida.

“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 (cannot make this up) in Royal Palm Beach.

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.”

Other lawyers said they were still puzzling over how to proceed.

“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.”

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.

[jk]

Re: Taking 2nd Mortgage to Pay the Foreclosure Lawyer