Wednesday, May 30, 2012

Attorneys' Sleazy Practices Leave State Bar's Loan Modification Ripoff Task Force With Hands Full; Dozens Probed, Disciplined; 18 Disbarred

In Van Nuys, California, the Los Angeles Daily News reports:

  • Paulette Breen sensed something was wrong when her home loan modification made her mortgage payments more expensive. Suspecting fraud, the Van Nuys resident hired a lawyer to sort things out. That only made things worse.
  • Breen is among more than 1,000 potential victims of attorneys across the state who are targeting homeowners facing foreclosure as part of the fallout of the mortgage crisis that began in 2007. These attorneys charge fees with the promise of stopping the foreclosure, but then don't follow through with the case and disappear with the money, according to Laura Ernde, spokeswoman for the California State Bar, which has reported a spike in these types of cases.

  • Since 2009, the State Bar -- which created a task force in 2009 solely to focus on the issue -- has investigated 1,186 loan modification cases involving 153 lawyers, according to Ernde. So far, 69 attorneys in 581 cases have been disciplined and 18 cases have resulted in disbarment. About 720 cases are still pending and another 291 are under investigation.
  • But there are no hard numbers on just how many homeowners have been victimized. Oftentimes, victims are immigrants or from low-income families, and may not know where to turn for help after they've been scammed.

  • "Is it happening very frequently? Absolutely," said Charles Evans, an attorney with the Los Angeles-based Legal Aid Foundation, which provides legal help for the poor. "We have seen dozens of these folks each just over the last year and for every one of those, there are dozens more that don't end up coming our way."

  • Sometimes, it's ignorance. Some of the consultants are real estate brokers who switched over to law or attorneys who may not be familiar with foreclosure laws, according to Evans.

  • But often, it's more sinister. Evans has handled cases where attorneys will place liens on the home to secure money they think they're owed, taking advantage of immigrants' lack of English skills and getting them to sign over deeds.

  • "They're just playing the odds," Evans said. "The folks that they target are desperate, they're scrambling from place to place to try and save their home. They rarely take the time to file a lawsuit or file a complaint."

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