Yes, you can afford a lawyer to fight a bank that wrongfully foreclosed

How much does it cost to get justice, when a bank forecloses on your house illegally? Thousands of ex-homeowners don’t pursue their rights to a financial settlement because they assume they couldn’t pay the legal fees.

In fact, it costs less than you fear. Consumer lawyers take a few cases at no charge. More likely, you’ll pay fees – upfront on or a monthly plan – tied to the lawyer’s estimate of the time it will take and your ability to pay. If they win your case, they’ll collect from the financial institution, too.

Before readers attack the “greedy lawyers” for defending “deadbeat” clients who couldn’t repay their mortgage loans, let me quote from a groundbreaking decision reached earlier this month by the Massachusetts Supreme Court. The court reversed two foreclosures because the banks – Wells Fargo and U.S. Bancorp, acting as trustees for investors –couldn’t prove that they actually owned the mortgages. Judge Robert J. Cordy excoriated them for their “utter carelessness.” The fact that the borrowers owed the money was “not the point,” he wrote. The right to deprive people of their property is a powerful one and banks have to prove they have the legal standing to do so.

American law cannot allow property seizures based on backdated, incomplete, or fraudulent documentation, no matter what the circumstances are. Otherwise, no one’s home is safe. Courts enforce private property rights through the cases brought before them. In other words, lawyers.

The Massachusetts case began not with consumers, but with the banks themselves. They asked the courts to affirm that the foreclosures were valid so they could get title insurance. That pulled the borrowers – Antonio Ibanez and Mark and Tammy LaRace -into the fray. When the horrified courts looked at how the foreclosures had gone down, they said, “no way,” and gave the former owners their property back.

Ibanez, a special ed teacher, bought the home for investment in 2005 and defaulted in 2007 on a $103,500 loan, according to the court papers. Even since, the house has been boarded up. Ibanez filed a Chapter 7 bankruptcy, so he now has title to the home and no obligation on the debt. The mortgage investors will take the loss. But litigation isn’t over, Ibanez’ attorney, Paul Collier, says. He expects the bank to appeal to the U.S. Supreme Court.

The LaRaces borrowed $103,200 to buy their home in 2005 and also defaulted in 2007. They had an offer on their home, but the servicer foreclosed anyway. (During the trial, the foreclosing law firm admitted that servicers are graded on how quickly they can liquidate a mortgage.)

The LaRaces have moved back into their long-unattended home, but first they had to clean up mold, fix plumbing, and make other repairs. They would gladly resume payments on the mortgage, their lawyer Glenn Russell says. But the trustee bank doesn’t own the loan. The investors don’t own it because the mortgage was never transferred properly. The original lender, Option One, no longer exists. So whom do they pay?

This important case opens the door to thousands of foreclosure do-overs in Massachusetts and might influence courts in other states. But there hasn’t been a rush by lawyers to get involved, probably because the field is complex and not especially remunerative. No class actions have been certified, so the cases proceed one by one. The financial trail can be hard to track (the Massachusetts documents were unwound by mortgage-fraud specialist Marie McDonnell). The lawyer – often, a sole practitioner — is up against the awesome resources of major financial institutions.

Neither Ibanez nor the LaRaces were charged for their lawyer’s services. Collier will file a claim for wrongful foreclosure and be paid from any settlement. Russell will do the same. He also thinks the LaRaces are owed something for the cost of repairing their home.

Very few cases start as pro bono, however. Lawyers who defend consumers have bills to pay, just as the banks’ corporate attorneys do. If you want to fight an unfair foreclosure, you might be offered one of several arrangements:

An upfront fee. “Many of my clients were formerly very successful individuals,” Russell says. On average, the value of the homes of the people who contact is “somewhat north of $500,000.” He suggests a fee based on their means.

Monthly payments. If you’re not making monthly mortgage payments, some portion of that money could be applied to legal expenses. Collier says he puts the payments into escrow and retains them if he gets the house back (he says he always does, in predatory lending cases).

Bankruptcy payment plans. The clients of North Carolina bankruptcy attorney Max Gardner are usually in a Chapter 13 monthly repayment plan. Each state sets the maximum attorney’s fee, payable as part of the plan.

Mostly, the attorneys get paid by suing the financial institutions, who settle claims or suffer court judgements due to their own illegal activity. People who beat up on consumer lawyers scream that they bring frivolous cases just for the fees. But consumer lawyers get paid only if their case is good, so they’re pretty rigorous about whom they choose to represent. “I was called crazy for practicing in this area of law, as ‘I would be broke’ by not getting enough fees,” Russell says. “Three years later, I am still here and still living my motto of helping people first.”

If you think you have a case, your toughest challenge isn’t fees, it’s finding a lawyer with the expertise to press your claim successfully, Gardner says. If you don’t have a personal reference to a qualified lawyer, the best place to look is the website of the National Association of Consumer Advocates. Next best: the National Association of Consumer Bankruptcy Attorneys. In either case, ask if the lawyer has won other securitization, mortgage servicing, and foreclosure cases. “They have to know what documents to ask for,” Garder says. That’s what wins.

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16 comments
Matt // 03/03/2011 at 4:20 pm

When are the Massachusetts bank hired foreclosure attorneys going to PRISION??? Write an article.

Matt

Ps i’m rolling over in my grave

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Jane // 03/08/2011 at 5:39 pm

When indeed? Why aren’t the prisons full of white-collar types already?

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Jane // 03/14/2011 at 10:45 pm

I’m rolling, too. But no one is going to prison except Bernard Madoff. Everyone else is getting a pass.

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Antonio Ridino // 03/18/2011 at 9:28 pm

I need a lawyer to help me fight Sovereign Bank. They tried to erroneously foreclose on a 4,000,000 home that had a mortgage of 400,000. I sued them and prevented the foreclosure but my finances and credit were paralyzed as well as my research for 2 years.The Bank has offered me a loan modification which would justify their wrongdoing.

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Jane // 03/20/2011 at 2:54 am

If you sued successfully, it sounds as if you have a good lawyer already. If the loan mod works for you, take it — trying to get justice from a bank has become impossible. Do what’s best for you now, and don’t look back.

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Mike Montiel // 02/15/2013 at 6:56 pm

My question is:
The NOD was filed over two years ago and I managed to delay the Foreclosure for over two years. The Trustee has set a new Trustee sales date without filing and recording a new NOD in two years.What will happen,if the Bank sells the place? Would it be a wrong full sale? What would be the legal remedies for California?
M.

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Jane // 03/04/2013 at 5:48 pm

Can any CA reader help with this one?

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Ginny // 04/20/2013 at 4:02 pm

I was trying to get a HAM from the bank. Complications keep occurring. They told me they were trying to get the foreclosure sale canceled and then sold if on April 15th, 2013. I went to a bankruptcy attorney and he told me I needed to hire him now before the bank takes everything I own. I feel like I’m being railroaded every way I turn. Should I find a lawyer that will take on the bank?

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Jane // 05/14/2013 at 5:14 pm

Gin59 — I feel as helpless as you do. The banks keep making a mess of foreclosures. Supposedly, they’re supposed to stop forclosure if a HAMP application is in process,but you’re experience shows that they’re not. Does the bank say it’s going to sue you for the remaining mortgage amount owed? In my experience they rarely do, because they couldn’t collect much if anything and would just drive you into bankruptcy. But if you have other debts that are a problem, you might consider bankruptcy, so you can start again with a clean slate.

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jack caputo // 09/09/2013 at 3:32 pm

I had 3 days to summit more docs to the bank and they still forclosed on me.

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Beth // 10/25/2013 at 1:54 pm

I need help finding a good atty. I had been foreclosed without the trustee date on the website.

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Jane // 11/25/2013 at 1:21 pm

The National Association of Consumer Advocates or National Association of Consumer Bankruptcy Attorneys are the only places I know. But the cases are expensive and hard.

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Sandra Jackman // 11/05/2013 at 10:11 am

Wells Fargo foreclosure, in Dec of 2011, we have been going round and a round with them and a calif attorney has not gotten any where with my case for almost a year now and spent several thousand dollars for his help!!!!! Please help us!!! Sandra Jackman.

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Jane // 11/25/2013 at 1:24 pm

You have a lawyer… I wish I knew what else to say. I’m so very sorry about the situation you find yourself in.

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John // 12/16/2013 at 11:13 am

For anyone and everyone who is need of a tenacious and dedicated firm to bring suit up against your mortgage lender, The Resolution Law Group is doing just that.

http://www.theresolutionlawgroup.com/

Feel free to contact me 866-781-0725 ext 302

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Jane // 01/26/2014 at 12:10 pm

Folks — I don’t know anything about this Connecticut law firm or whether it can help people in many states. But I thought I’d post it because so many of you ask about finding attorneys to fight banks. Here are two other suggestions, if you don’t have a personal reference to a qualified lawyer: the website of the National Association of Consumer Advocates. Next best: the National Association of Consumer Bankruptcy Attorneys. In either case, ask if the lawyer has won other securitization, mortgage servicing, and foreclosure cases.

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