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05/22/12

Lawyers Prey on Foreclosure-Facing Homeowners in San Fernando Valley and Beyond

 

(Source: C.J. Lin Daily News, Los Angeles(MCT) — 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.

The attorney told her there was indeed fraud, and promised to sue the bank and get her a new loan. She paid him $8,000 upfront and he advised her to stop making her mortgage payments while the matter was being pursued in court.

That turned out to be very bad advice. Now, the attorney has been disbarred for a host of complaints from multiple clients, and Breen, a cancer survivor, is about to lose her home of 20 years.

“I’m scared,” Breen said. “I’ve done everything the way I’ve been brought up — I pay my bills, I don’t bother you. I don’t even have a parking ticket. And I’m losing everything.”

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.

“People were faced with losing their homes, so some attorneys were sort of preying on distressed homeowners,” Ernde said. “They work with clients to pay upfront fees, promising them that paying would get them help with the mortgage so you can keep your house.”

More than 2.1 million homeowners in California are underwater on their homes, according to the Campaign for a Fair Settlement, a national coalition advocating on behalf of distressed homeowners.

Glendale, Santa Clarita, Palmdale and Lancaster are among the cities in L.A. County that have the highest number of foreclosures, according to ForeclosureRadar, which tracks county recorder filings.

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.”

Breen, an Emmy-winning TV producer, is neither an immigrant or poor — proof, she says, that anyone can fall victim to the scams.

“It’s not just average middle-class people,” Breen said. “It’s people who do business, run a business, and get scammed.”

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