I received a very disturbing call last night from someone who was facing imminent eviction from her home. The caller lives near Akron Ohio in a nice house in a nice neighborhood. Like so many people I’ve met during the foreclosure crisis, she and her husband (she says mainly her husband) were persuaded by the neighborhood mortgage broker (who, I am sure, the week before was a construction contractor or used car salesman) to refinance their home back in 2005.
She told me that for the past year, she had been paying a law firm in Florida to “Represent” her by protecting her interest in the pending foreclosure and seeking a modification of her loan. She thought she was doing the right thing to protect her family home. She reported sending multiple rounds of documents to the Florida “Lawyers” and that the repeatedly reassured her, in writing, that her house would not be foreclosed on. In addition, they guaranteed to obtain a modification for her.
When I pulled up the court docket last night I was horrified. The foreclosure complaint went to default judgment, Sherriff’s sale and Confirmation with no appearance being made by anyone on behalf of this family. My caller read me emails from the Florida Law firm reassuring her that this would not happen. What was even more disturbing was to discover that this was a case, where the plaintiff who sued her, a securitized bond trust, could not possibly have had standing to file the foreclosure case. My quick review of the documents filed in the current foreclosure and a foreclosure that was filed in 2007 revealed that the client had a strong argument for the dismissal of the lawsuit, and failing that, this was a case that in my judgment would be very difficult for the foreclosing lender to win at trial.
Yet the Scamming “Lawyers” in Florida allowed the case to go to default judgment, sale and confirmation without raising any of the very legitimate legal issues that they could have raised in court. At a minimum, this family lost the legal leverage that could have resulted in a better modification, but its pretty clear, absent a miraculous reception for a motion to vacate the judgment (its been more than a year since judgment so we will have to convince the judge that there was fraud on the court) that we will be filing on their behalf that they will lose their home.
Ironically, for about the same cost of the modification mill in Florida, we could have provided a legitimate defense to this family that would have resulted in at a minimum a real offer to modify their loan or a dismissal of the complaint.
That’s why I am pleased that the US Justice Department and the FTC have announced this week a major effort to go after these modification mill and foreclosure rescue scammers. Its easy to think of this as an opportunity to complain about the fact that the target of the criminal investigations are not Wells Fargo, Chase or Citicorp, but my caller last night reminded me how real of a problem this is for struggling homeowners.
In our practice we have brought several successful civil suits under Ohio’s strong Consumer Sales Practices Act against foreclosure rescue scams, many of these folks, embarrassingly for my profession are lawyers, but the bright side is that we have found that the malpractice insurance may cover the damages that can flow from abuses by modification mills. It won’t get you back your home but we can recover some money to ease the pain of being scammed.
Contact Marc Dann at firstname.lastname@example.org