Degradation of Legal Profession in Foreclosure Fiasco

Abigail Field raises a salient point regarding the whole soup to nuts foreclosure fiasco:  where were the lawyers at all phases?  Here’s an excerpt regarding the foreclosure segment, but the whole piece is here at her blog, Reality Check:

Foreclosure Business Model Destroys the Legal Profession

The corruption of our legal system is even worse at the individual foreclosure level. For the uninitiated, here’s how most banks deploy “lawyers” in foreclosures:

A bank computer system says foreclosure should start. Another computer system “refers” the case to a “network” law firm or attorney. The network firm fills in blanks in papers, requests other papers (which are often created on demand, aka evidence manufacture), and sometimes creates the papers themselves, by signing in the name of MERS. In those cases, the lawyers allegedly transfer property from the original creditor to the plaintiff. That’s a neat trick–your client needs to prove they own an asset? Put on a MERS hat and sign the papers giving it to your client. The network firm then files the papers, and if needed, shows up in court.

If the homeowner contests the foreclosure or for any other reason it becomes necessary, the lawyer sends a message to the non-lawyer vendor running the “network” of law firms using the computer system. The vendor sends back answers, typically without communicating directly with the lawyer’s bank client, except that the vendor might have access to that bank’s computer systems.

This type of communication creates tremendous problems for homeowners in bankruptcy and foreclosure. Indeed, a frustrated bankruptcy judge ordered HSBC to tell “its” lawyers that they should feel free to contact the bank as needed because so many problem resulted from the vendor system. I detailed another example of how this system damages homeowners here, in a case when the bank twice tried to foreclose on homeowners who were current.

Lisa Epstein uncovered a different kind of example of these communicationsthat the network attorneys accidentally filed in court. In the communications, the lawyer is asking “BAC Affidavits” for guidance on how to handle a tricky situation: the lawyers are foreclosing in the wrong name. Note, “BAC Affidavits” isn’t part of Bank of America; apparently it’s someone or some department within Lender Processing Services. BAC Affidavits and the lawyer agree to correct the record only after the foreclosure is complete in order to avoid paying the relevant homeowner association more. Nice.

Olenick’s example of foreclosure lawyering I mentioned earlier includes a false lost note affidavit, an in-credible description of the note’s discovery, promise to produce it, and reneging on that promise, plus a crazy assignment of the mortgage. Much more on foreclosure evidence manufacture here.

Mortgage loan documentation and the surrounding lawyering is such a mess, New York Courts shut down foreclosures just by requiring attorneys stand behind their filings, and Nevada similarly slowed foreclosures to a crawl bycriminalizing common types of evidence manufacturing. When New York initially imposed its rule, I talked to Mark Starkman, an attorney who forecloses for folks who hold the loan they make. He had no concerns about the rule, since he made sure the papers were done right at the outset, and he kept them in his vault. In short, he was still a professional lawyer.

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One thought on “Degradation of Legal Profession in Foreclosure Fiasco

  1. I have witnessed the degredation of our legal profession in my foreclosure case. The attorneys will lie, cheat and steal for a fee. How do they look their family members in the eye when they come home at night. How can they look in the mirror each morning when they shave or put makeup on, or both.

    Joe

    Like

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