It would seem that the media and court judges were the last two groups to realize that lawyers pursuing foreclosure against homeowners on behalf of insolvent banks routinely lie in order to push lawsuits through the court system. Homeowners attempting to work out alternatives to foreclosure have known for years through direct experience that it can be extremely difficult to deal with a law firm when attempting to save a home.
But the reasons that lawyers engage so widely in this practice are not clear, even though close to 75% of mortgage foreclosure lawsuits inspected have errors or abuses. Beyond simple greed and laziness, though, there is usually more incentive to proceed with a fraudulent or mistaken foreclosure, rather than take the time to make sure the paperwork is in order, the bank has a real case, and it is clearly laid out to the court.
One of the first reasons for so many banks and lawyers initiating lawsuits with poor quality has been the dramatic rise in the foreclosure rate, which has taken vast extra resources to address. But servicing companies and banks have simply do not have the extra money, time, and staff to dedicate towards solid loss mitigation efforts.
The most that lenders have done is to shorten the time that is taken in beginning collection efforts and the foreclosure process. Years ago, banks would wait close to 45 days after a payment had been missed to begin calling borrowers. Today, collections departments will begin calling within 15 days of a missed payment. As well, homeowners used to be able to expect around 10 calls a month -- today it is closer to one every day or more often.
The law firms that are hired to pursue these foreclosures in court have also been caught unprepared for the rise in delinquency rates. Although no one in America is under the impression that we need any more lawyers, the rising foreclosure rate has caused existing foreclosure and collections attorneys to become careless about the quality of the documents filed in court.
Even worse for the lenders and lawyers is that many owners of loans will actually penalize law firms that take too long with the foreclosure process. A flat fee may be paid to the attorneys for an expected amount of work, and any delays or extra work required will not be paid. This makes it more likely that the lawyers will try and file anything, even if it is based on lies or mistakes, rather than take a pay cut.
The government-sponsored enterprises have these types of policies that offer a set fee to law firms for foreclosure actions and will not pay over and above that amount. They also stipulate that the foreclosure process must take no longer than a certain amount of time. Any work or time that is required of the lawyers after this will not be paid. This gives an even stronger incentive to proceed with poor quality lawsuits.
Furthermore, if homeowners are surprised at the lack of communication skills banks and servicing companies have when dealing with borrowers, they should be aware that banks exhibit this same inability with the law firms they hire to file lawsuits.
Often, homeowners may be trying to work out a solution to foreclosure, such as a short sale or mortgage modification, but the lawyers will go ahead with the foreclosure process anyway. In fact, the borrowers may be told by the bank that the process is on hold, while the law firm is never instructed to delay pushing the property towards a sheriff sale and eviction. This is a common communication breakdown.
A final problem is that the legal process may begin even before the lender or servicer is technically allowed to begin loss mitigation talks with the borrowers. Often, the file will be sent to the attorneys to begin preparing lawsuit documents within a couple of months after default, but the lender is not authorized to offer a modification until three months of payments have been missed.
All of these circumstances combine to give law firms hired by servicing companies more financial incentive to file fraudulent lawsuits against borrowers. The fact that these attorneys know that local courts are swamped with foreclosure cases and homeowners rarely show up for hearings are additional incentives -- their frauds or mistakes are unlikely to be discovered or pointed out by defendants.
Author Resource:-
Nick publishes articles for the My Foreclosure Lender website. These articles provide information to families dealing with foreclosure, describing a number of alternatives they can use to avoid foreclosure. The site describes various solutions, such as loan modification, foreclosure lending, deed in lieu, filing bankruptcy, and others. Visit the site to read more about how the foreclosure process works: http://www.myforeclosurelender.com/
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