From the FAQ Page:
COMMENT: I contacted one attorney on your list and had a consult with another firm which is not part of your list but has been referenced quite a few times in the blogs. I have a problem with both and find them a bit predatory (sorry guys and gals) and quite frankly, am reticent to contact any others.
One charges $350 a month and the goal is to get the mortgage nullified due to discovery of fraud. If they succeed in this, they get a 40% interest in the property (new appraised value) in the form of a mortgage. Ok, that’s win-win I guess. They then go for legal fees and get a share of any fees recovered over and above their actual legal fees if successful in a counter suit against the lender.
If they instead get a workout/modification, they then get a 40% interest in YOUR savings in the form of a new mortgage with them. So now the homeowner has a modified mortgage with lender and a second mortgage with attorney, basically putting homeowner upside down, again. (Editor’s note: not necessarily — and remember whether you accept the settlement is strictly your decision and not the attorney’s decision).
Second attorney was similar but upfront fee for audit/retainer. If no fraud found, then only small portion of retainer is reatined to cover the audit. If they go forward with trying to defend/get a work out, etc./they charge by the hour AND get 33% of any savings. I assume same as attorney #1, in the form of a mortgage.
You all really see this as ethical?
ANSWER: YES AND NO. YES IT IS PERFECTLY APPROPRIATE FOR AN ATTORNEY TO GET PAID A FAIR FEE FOR HIS PROFESSIONAL SERVICES. YOU HAVE A CHOICE OF PAYING HOURLY, WHICH NORMALLY RANGES BETWEEN $250-$400 PER HOUR.
That is what people pay when they see a lawyer. In some cases, like personal injury (auto accidents etc.), lawyers have worked out a method of allowing clients to have access to their services even if they don’t have money. The lawyer takes what is called a contingency fee. That fee, which is fairly standard throughout most of the states is 1/3 of the recovery of the value awarded or settled to the client if the matter does not go to court, 40% if the matter goes into litigation, and 45% if the matter goes to appeal.
Sometimes the attorney will even advance the filing fees, discovery costs and expert witness fees in a case on behalf of the client. For these foreclosure cases, or mortgage disputes, the hours spent can be very intensive and time is money.
Prospective clients often forget that it is their case and their life and that the lawyer has nothing to do with it unless he chooses to accept the retainer arrangement. On the other hand, it is improper under most rules to take an interest in the property that is the subject of the dispute, particularly a home residence. But the fees still apply.
So if the only way you can afford to pay the lawyer is to get a mortgage or give the lawyer a secured interest in your home AFTER the case is settled, then in most cases the fee would be considered fair and the arrangement within the bounds of legal ethics. If the lawyer is taking a sum of money that goes far beyond the costs of the case and is basically charging you hourly PLUS the full contingency fee, then you are right — that is predatory. The situations you described do not seem predatory although your description sounds that way.
You have a choice of paying an hourly fee plus the costs of the case and the lawyer will be perfectly happy to take your case. You don’t want to or can’t pay that fee so you want the attorney to take a risk as to whether he/she will get paid at all. You object to the amount of the contingency fee because you feel you have already been the victim of predatory behavior. You would like them to work for you for less than they charge other clients and they are not willing to do that. Why should they?
Filed under: Eviction, GTC | Honor, Mortgage, foreclosure | Tagged: attorneny fees, foreclosure defense, foreclosure offense
I like these people too. HOWEVER, we need to get everyone on the same page. let’s hear from all those who would come from a training seminar for the auditors so they can do a complete, job, make more money and do a better job for the homeowners. Something includes title record, chain of title on note and mortgage, securitization, appraisal etc.
Thank you for posting that excellent response Cheri Robinson, Esq. , and MFI-Miami
After reading the post from John the RE Broker, I was about to opine very much the same as both of you did.
P.S. – I highly recommend MFI-Miami for forensic loan auditing
Russ
100% in agreement.
Most people have acquired either voluntarily or by fraud a home in conditions that for the most part are unrealistic and predatory in nature. Most people have actually gotten involved in a legal issue that is manifesting itself in financial terms. When we buy a home we sign hundreds of DOCUMENTS, these documents create certain commitments on our part that in order to be removed, vacated or modified will require the expertise of someone who can decipher them, some one to do the proper compliance testing of those documents and disclosures and some one who is highly skilled and trained in those areas that involve the LAW.
I do not believe that a good lawyer is expensive, it is not how much it costs, rather how the fees will be paid. Some attorneys and compliance auditors have difficulty in providing the client with a clear understanding of the actual value of their services, And I have to say that it is very difficult to do so.
The people who are under stress due to this foreclosure issue should be flooding their legislatures with phone calls, forcing their government officials to change the laws, to educate them as to what you learn on this BLOG.
Write to your state treasurer, flood them with letters, with phone calls. The hear from the lender lobbyists everyday, but they do not hear from you.
An attorney charging 30-40% contingency is not predatory. Like Neil said, it’s either this or pay the attorney $300-400 per hour with a $2500-$4500 upfront retainer. TILA/RESPA law and issues of securitization are a very complicated section of RE law so you will be paying a high dollar amount for attorneys who specialize in this field. Thanks to Neil, more and more attorneys are coming into the fold. But, if we learned anything from the OJ Simpson murder trial, it is you may have have the right to justice but you have to pay for it and with attorneys you get what you pay for.
I get calls all the time from people who read blogs on this site and then call me for an audit which is great but they expect me to do it for free because they’re upside down on their investment properties. Then get upset when I tell them my pricing. I don’t know if these people are clueless or if it’s just the narcissism of today’s society.
Being one of the Lawyers that get it, I feel compelled to chime in on the fees. There is definately a difference between showing someone real estate and collecting 25k because the client can afford a 500k home and analyzing, formulating, articulating and convincing a judge or jury of a legal position. Being lisenced to sell real estate by virtue of my lisence to practice law, I would hardly compare the two industries. No one ever, EVER asks the doctor how much the surgery will cost or how much the chemo will be or the kidney transplant. They simply have the procedure. Likewise no one tells the personal injury lawyer that the case is simple and that they are taking too much money. If they did, the lawyer would simply say “find another one “. Here the lawyers have all been trained extensively in this process and understand what we are doing. We are professionals in this and should be paid and treated as such. We understand that we are dealing with a population who is in distress and simply cash strapped. They desperately need our help and we are willing to put the work in. A contingency fee is our gift to you. A monthly fee is your committment to us.
In personal injury each claim follows a similar pattern and the standards of proof are the same, the plaintiff is in it for the money and have medical expenses and are therefore unlikely to walk away from the case. In foreclosure each case is different and the circumstances have to be detailed. This is new and emerging caselaw which a real foreclosure lawyer must stay abrest of. We also have worry about homeowners who decide it is too stressfull and that giving up and handing in the keys to their home is eaiser. Should that happen we lawyers are left with a client with no assetts and we have spent many man hours with nothing to show for it.
The bottom line is you need help. REAL HELP. Not the kind that comes from Credit Counseling that is paid for by the Lenders or State agencies. You can’t afford the help and we have accomodated you with a payment plan. If you don’t like the arrangments, find another lawyer. Remember you get what you pay for.
I have to agree, 40% is sort of like jumping from one scam to another. I have been a RE broker for 17 years and the times I hear clients complain about 5-6-7% would fill a journal…so talking 1/3, 40% is like somewhere out of this galaxy. I would think that if an attorney fely like this was a “sure thing”, $20,000 would be agood week’s work…or even a good month’s work! If we talk about a $200,000 house and 40% that’s $80,000. Sure, the owner get’s $120,00 in that deal but I know of NO profession that get’s these sort of fee’s…holleywood agents??? no… This kind of percentage gives your profession the impression that is deserved. You are out for ytourselves, not the client you represent. Since it’s the “law” you deal with, I guess it’s more important than health care. I think you deserve to make a living, and the ones that are GOOD should earn at the top of the scale, but c’mon, NO performance based emplyment agreements get those sorts of numbers….NONE!
Abe Lincoln would be rolling over in his grave.
What state are you in??????