Why More Attorneys Aren’t Helping Homeowners

As you all know, we’ve tried for the last year to find attorneys who can charge a reasonable amount of money to help homeowners fight foreclosure. And last year I thought that lawyers were possibly afraid to go to court for various reasons.

It turns out I was correct, partially. However, the reasons weren’t the same as I once thought. So, here’s why there aren’t more lawyers around to help homeowners.

1.  Many of the laws in place were written by politicians, who are lawyers! I think a lot of  them have a vested interest in seeing things remain the same.

I always wanted to work for a defense firm as a paralegal. Why? Because the insurance companies had money to pay their bills, which meant that my standard of living was better because my employer could afford to pay me more.

Working for a plaintiff’s firm that takes cases on contingency means less pay because the firm gets paid when a case settles. Plaintiff’s firms did not have the benefits that would attract the best employees because they had to run a tighter ship and cash flow was always an issue.

If a lawyer can continue to represent a client with deep pockets, why would they stop? That’s right: they won’t. It’s very lucrative to work for the banks right now, especially at $4-5k per home foreclosed upon. A law firm here in Arizona is making MILLIONS every month foreclosing on people who never fight back.

2. Despite the large numbers of attorneys, there are few skilled ones who are worth $300 per hour. I’ve seen this consistently over the last two years of being on my own. Attorneys are regular people just like the rest of us. And despite what a lot of people believe about them, just because you go through law school doesn’t mean you’re a good lawyer. I’ve seen many of them let their egos get in the way of helping people. I’ve also seen a sheer lack of creativity and no entrepreneurial spirit on the part of many lawyers.

For example, there are plenty of recent, applicable case laws on mortgage fraud and the standing of MERS. However, there is still a belief that a homeowner can’t win these cases, which is just not true! Homeowners ARE winning cases on their own while lawyers are still waiting for someone to win a landmark case before they start taking these cases. By the time that happens, it’s too late.

I can understand the desire to win these cases — competitiveness is bred into attorneys and legal professionals. I can also understand the fear on some attorneys’ part that they might not actually put a client into a better position for the money they will spend.

However, I think too many attorneys are missing a huge opportunity help people and specialize in an area of law. If you think this mortgage mess is going away anytime soon, you are mistaken.

3. State bar associations are not helping lawyers by investigating them. The loan modification industry is a great example of this. This entire industry was basically dead overnight in California because of the standards set by the government and lawyers’ fear of investigation by the legalized gang known as the bar association.

Most lawyers spend thousands or hundreds of thousands to attend law school. Most of them don’t want to risk getting sideways of the bar association. This too is understandable, but probably not grounded in reality.

Bar associations are just another regulating entity. Yes, they probably are powerful. But are they the last word on what is legal and illegal? I doubt it. They are just another hoity-toity club that charges ridiculous fees to be a member and whatever else they can squeeze out of attorneys.

Am I wrong on this last point? I’d love to hear from the lawyers out there!

Got questions? E-mail me at christine@desertedgelegal.com.

Is California’s Attorney General Really Protecting Consumers from Loan Mod Scams?

Absolutely not!

California’s AG, Edmund Brown, has gone way too far in his supposed bid to protect Californians. I’m probably late in my commentary on this issue, but I recently did some research and was stunned when I read about what the AG and lawmakers in California are doing.

It’s great that Brown wants to protect Californians; that’s his job as Attorney General. It’s too bad he wasn’t around BEFORE the mortgage mess. If he was truly protecting consumers on the home loan issues, he should have been doing it long before the housing bubble burst. It’s really easy to look like you’re helping homeowners AFTER the damage has already been done.

So why all the press conferences, public appearances and opportunities to look tough on loan modification scams? You guessed it: Brown is running for Governor of California and will use all this saber-rattling to convince Californians that he has done a good job of protecting the citizens of California.

California Bill 94 was also passed recently, and it’s a tough law that on its face appears to protect homeowners by cracking down on scams and unscrupulous loan modification companies. The problem with the law is that it erroneously assumes that everyone and anyone who does anything related to foreclosures or loan modifications are scammers and out to prey on homeowners, which is absolutely not true.

Interestingly, the California Department of Real Estate is telling California homeowners via their website to do their own loan modifications.

While I obviously think that an individual should have the option to get a loan modification on their own, they should also have the option to hire someone to help them. What if you don’t want to deal with the endless hours on the phone to get through to the lender? What if you don’t want to negotiate your own loan modification? You’d probably hire someone to help you. But this law makes that difficult.

Even worse, based on the lenders’ track record, we know that they aren’t helping enough people fast enough. They’ve only helped a fraction of the homeowners who qualify for a loan modification.

As a result, you’ll see real estate values continue to fall. We haven’t hit bottom yet! There’s still a massive wave of Alt-A loan defaults that are coming.

You’re also going to see an exodus of qualified, legitimately operating people and businesses providing services related to foreclosures either leave the state entirely, or stop providing services altogether. No one wants to work for free and no sane person would want to be subject to that kind of scrutiny.

You might be thinking that those people who are legitimate should get licensed, right? Yes, they should comply with the law. But just because you have a license doesn’t mean Brown won’t investigate you! Even lawyers, who are already subject to licensing and ethics requirements, are being investigated.

Whether intentional or not, the goal of this legislation seems to be to force everyone who provides services in this area out of business.

When that happens, homeowners lose access to legitimate, qualified professionals. Homeowners, who were preyed upon by the lenders in the first place, are left with only one option: deal with the people who wrote the bad mortgages in the first place and do it without representation or any tools to help them get a better modification.

What happens when their lender says they don’t qualify for a loan modification? Foreclosure or bankruptcy are likely outcomes, both of which might be avoided if this legislation were written to protect consumers instead of the banks.