First it was the bankers. Now, it appears, it’s the lawyers.
Each day seems to bring a new story of some homeowner being taken advantage of or being treated very poorly in connection with the housing crisis and foreclosure fraud scandal. So far the reports have focused primarily on the lenders and those working on the behalf of such lenders, but now comes news of attorneys acting poorly and looking to capitalize on the crisis rather than help struggling homeowners.
Not that we should be surprised at this point.
A Los Angeles-area law firm was sued this week for allegedly collecting illegal fees for a “forensic loan audit” from a California couple as part of a promise to stop the foreclosure of their property–a promise that was quickly broken. According to the suit, the attorneys promised that the audit would induce the couple’s lender to modify their loans, another promise that never materialized. And according to the complaint, the attorneys making these promise never had any intent to try and stop the foreclosure process and were just interested in collecting fees.
Many think this suit is a sign of many more to come. As we learn more about the depth of the bad behavior it is hard to imagine that more claims against attorneys, accountants and real estate agents wont follow. Real estate transactions are complicated transactions, even if there are some people who, at the height of the boom, argued the opposite. Furthermore, the foreclosure process as it currently stands offers only limited protections for struggling homeowners, leaving open the possibility that homeowners can be taken advantage at many points in the process. Given what we know now, it’s well past time to reform the foreclosure process and rigorously regulate the residential mortgage loan industry. Here’s hoping Elizabeth Warren can do what she needs to.
photo courtesy of umjanedoan via Flickr
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