Attorneys Offer A "Dizzying Variety Of Payment Plans" When Handling Foreclosure Defense Cases

The St. Petersburg Times reports:

• With 466,500 Florida mortgages in default, more and more lawyers are vowing to "help you fight foreclosure.'' But help often comes at confusing cost, with cash-strapped homeowners forced to choose between a dizzying variety of payment plans.
• Some foreclosure defense lawyers charge by the month or by the year. Others require an up-front retainer, sometimes several thousand dollars, plus more money as the case proceeds. And controversially, some even require the homeowner to pay a big bonus or contingency fee if the lawyer wins the case.

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• [Attorney Mark] Stopa says he generally charges $1,500 a year, which enables clients to "get off really inexpensively'' if the case is resolved within 12 months (If not, they can re-up for another year for another $1,500.) Handling a large volume of cases, many of which have similar legal issues, helps keep the fee relatively low, he says. Stopa says he has had several clients who first went to other lawyers and were quoted fees reportedly as much as $18,000 or even $35,000.

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• Kaufman Englett Lynd or KEL, a multistate firm with offices in Tampa and St. Petersburg, also charges by the year, although its annual fee is around $2,500. [...] Kaufman is highly critical of the practice at some firms of charging a monthly fee, typically $500. "It's the biggest scam,'' he says. "It's really in their benefit to make (the case) keep going and going. These cases on average, if you contest them, run from 12 to 24 months and that means $6,000 to $12,000. And the minute the guy stops paying, they're off the case.''
• But other lawyers argue that monthly fees make sense, especially for borrowers who want to move the case along quickly.
• "Suppose the property is vacant and the client is an out-of-town investor and the objective is a waiver of deficiency,'' says lawyer Richard Shuster, who has offices in Miami, Fort Lauderdale and Melbourne. "We've had some cases resolve in under 90 days.''
• Shuster's firm, which charges a monthly fee of $495, says many clients like paying the same amount each month instead of being socked with huge bills during periods when a case requires a lot of the lawyer's time. "In a month when a case goes to trial, we may do $10,000 worth of work and it would be very difficult for the client to afford that,'' Shuster says. "A monthly arrangement means that in some months we may be slightly overpaid and in others slightly underpaid, but we believe it balances out.''
• For lawyers doing foreclosure defense, the ultimate victory is getting the buyer a "free'' house. But it might not be as free as the client thinks. Shuster's firm charges a bonus if a foreclosure suit is dismissed with prejudice, meaning the bank cannot refile the case, and the firm is able to remove all liens and other encumbrances on the property. So far, judges have dismissed three cases with prejudice but "we have not finished quieting title in those cases,'' Shuster says. "We wait for the time for appeal to expire or there may be a second mortgage to be settled or property taxes that need to be taken care of. The bonus when we get someone a free house, it's generally $10,000 or $20,000.''
• But how would the homeowner pay that much? Shuster says he would trust clients to pay whatever they could each month or else pay the full amount if they sell the house. But he says his firm would never put a lien against the house "because we don't want to be a creditor of the client.''
• That's not the case at the Ticktin Law Group, a Deerfield Beach firm with a Tampa office. When it wins a foreclosure case and quiets title, it charges a contingency fee of up to 40 percent, based on the property's value and payable via a new mortgage held by Ticktin. That means the client still makes mortgage payments, only this time to the lawyers instead of to the bank.
• "If we are able to defeat the bank's mortgage, then we will have won the equity in the house,'' says Peter Ticktin, the firm's founder. "Our clients that have given us mortgages are very happy with us because they've won their houses.'' Ticktin says his firm is "in it to win it'' though he acknowledges that most of its 3,000 foreclosure cases have yet to result in a free house. Apart from the contingency, the Ticktin group charges a $100 "set-up'' fee plus monthly fees ranging from $330 to $600.
• The Florida Bar offers little guidance on attorneys' fees other than that they should not be "excessive.'' "Generally, lawyers should be able to correlate between the services they actually provide and the fees that they charge,'' says Elizabeth Tarbert, the Bar's ethics counsel.(1) "Whether or not you can do that when just charging a flat monthly fee, I don't know.''
• Matthew Weidner, a St. Petersburg lawyer who represents borrowers, typically charges $1,500 to $2,500 up-front, but says he bills against those amounts. "Ethically, I want to be able to show what I've done for my money through time records, e-mail, phone calls,'' he says. "The key is records — being able to defend your records in front of a judge.''

For the story, see Confusing lawyer fees complicate foreclosure battles.

Editor's Note: I'm surprised none of the attorneys interviewed for the story raised the point that, in Florida, where their homeowner/client is the winning party in one of these cases against an institutional lender, an entitlement to recover 'prevailing party' legal fees from the losing bankster typically arises. Further, where a contingency fee is involved, a court may also approve the recovery of an additional 'bonus' amount from the losing bankster. See:

• Fla. Appeals Court: Homeowner Entitled To Nail Bank For Prevailing Party Legal Fees After Lender Voluntarily Dismissed F'closure Case w/out Prejudice,
• Defending A Foreclosure Defense Case Pro Bono? Don't Forget The Contingency Risk Factor When Sticking Losing Lender With Tab.

While I'm quite confident that at least a couple of the attorneys interviewed for the story know about it, I'm also equally confident that there are many foreclosure defense attorneys who are completely clueless of this fact, in which case, it's up to their client to educate them on their legal/ethical obligation to seek recovery of these fees from the lender.

(1) See footnote 1 of this post, and go here for approximately 100 or so links to Florida court decisions, for guidance as to what constitutes excessive legal fees in the State of Florida. multiplier