Would you be willing to pay your foreclosure lawyer by taking out a second mortgage on your home?
A recent New York Times article explored this new wrinkle being practiced by some Florida law firms that are desperately searching for ways to get paid for challenging bungled foreclosures.
While foreclosure lawyers collect some money from clients and seek legal and contingency fees from the banks they successfully challenge, they might only come away with a pittance of what their time is worth. That has led some litigators to take a piece of the old homestead as collateral should their client be unable to pay their legal bill in full.
Here's how it works: If the law firm convinces the court to nullify or reduce the original mortgage due to sloppy processing by the lender, the client agrees to take out a new mortgage for 40 percent of the savings. For example, if the original $500,000 mortgage is reduced by the bank to $200,000, the client would owe the firm 40 percent of $300,000, or $120,000, minus fees paid by the bank and any sums paid to the law firm.
Lawyer Peter Ticktin of Ticktin Law Group in Deerfield Beach admits the "pay later" plan is fraught with uncertainty, not the least of which is whether his clients could or would pay the debt over a period of years, and what he would do if they did not.
Then again, these are largely uncharted waters for law firms that rarely had a legal leg to stand on in foreclosure cases until the robosigner revelations hit the headlines last fall. Now they're in it to win it – even if it means owning a piece of the home they rescued from foreclosure.
The Times notes that the practice "is controversial among defense lawyers, some of whom call it creepy or crass." And that's before cocktail hour. Some might wonder what's next – a literal pound of flesh with transplantable organs as collateral?
Then again, it is hardly predatory for a lawyer to expect to be compensated for the considerable time it takes to unwind these bungled foreclosures. If they don't help those who have been denied due process, who will?
What do you think?
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