Latest Posts
Home > Debt Articles > California Bar Journal Issues Warning on Mass Joinder Mortgage Litigation

California Bar Journal Issues Warning on Mass Joinder Mortgage Litigation

Nancy McCarthy of the California Bar Journal published an article warning consumers about the sudden wave of mass joinder marketing and the 1012-R mailers that are being sent out.

When Los Angeles lawyer Luis Rodriguez responded to a summons-like mailer [Form 1012-R] soliciting him to join other homeowners in a lawsuit against the Bank of America, he was told he qualified to be a plaintiff and had only to “donate” $6,000 to sign up. Rodriguez, a deputy public defender and member of the State Bar Board of Governors, was told the bank had misled consumers, but “high caliber” lawyers would handle the case. Be patient, he was told; these cases take a year or two to resolve. And, he was promised, he would receive some money.

The solicitation came to Rodriguez’s home and although he once had a BofA loan and had refinanced, the bank was no longer involved. But he apparently was a target of the latest marketing effort to attract homeowners who, unlike Rodriguez, are facing foreclosure. (Rodriguez did not join the suit.) The California Department of Real Estate issued a consumer alert last month warning mortgage holders to beware of such solicitations by lawsuit marketers who request upfront fees to file “mass joinder” or class action lawsuits with promises of extraordinary home mortgage relief.

The marketing materials variously claim a class action lawsuit may already have been filed and a homeowner can join as a plaintiff and can stop paying the lender, the lawsuit will help modify a home loan, or filing a lawsuit will stop the homeowner’s payment obligation and foreclosure. One Internet advertisement claims, ” . . at the very least, damages could be awarded that would reduce the principal balance of the note on your home to 80 percent of market value and give you a 2 percent interest rate for the life of the loan.”

The marketing materials “always seem to suggest with hyperbole that the result an individual homeowner can get is everything from a cash settlement to reduction in the loan or what they call an equity strip, which means they get the home free and clear,” said Wayne Bell, DRE chief counsel.

Such claims, he added, are “often overblown and exaggerated. But people are desperate for some kind of hope, and this gives them the hope.”

For more on this article and to read the full article, click here.

California Bar Journal Issues Warning on Mass Joinder Mortgage Litigation
Get Out of Debt Guy – Twitter, G+, Facebook

California Bar Journal Issues Warning on Mass Joinder Mortgage Litigation by

Share This and Spread the Word

About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Barrie Real Estate

    Maybe the costumer has no big amount of money for them to pay for lawsuit required. I think there are solicitations that are fake though, and some apply for load modifications.

  • http://www.thebarrierealestateblog.com/ Barrie Real Estate

    Maybe the costumer has no big amount of money for them to pay for lawsuit required. I think there are solicitations that are fake though, and some apply for load modifications.

  • PaulMolinaroEsq

    THIS IS PART FOUR

    “While there are lawyers and law firms which are legitimate and qualified to handle complex class action or joinder litigation, you must be cautious and BEWARE. And certainly check out the lawyers on the State Bar website and via other means, as discussed below in Section III.”

    Ah, finally, the DRE admits that “there are lawyers and law firms which are legitimate and qualified to handle class action or joinder litigation.” But, we’ll have to wait to read Section III to learn how to locate these legitimate and qualified lawyers and law firms. I await Section III with no less anticipation than an Oxford English professor awaiting Act III, Scene One of Hamlet.

  • PaulMolinaroEsq

    THIS IS PART FOUR

    “While there are lawyers and law firms which are legitimate and qualified to handle complex class action or joinder litigation, you must be cautious and BEWARE. And certainly check out the lawyers on the State Bar website and via other means, as discussed below in Section III.”

    Ah, finally, the DRE admits that “there are lawyers and law firms which are legitimate and qualified to handle class action or joinder litigation.” But, we’ll have to wait to read Section III to learn how to locate these legitimate and qualified lawyers and law firms. I await Section III with no less anticipation than an Oxford English professor awaiting Act III, Scene One of Hamlet.

  • PaulMolinaroEsq

    THIS IS PART THREE

    Just a thought here, but would it be okay for lawyers with impressive track records to claim to have impressive track records? Or do winners have to pretend to be losers? There’s a Charlie Sheen joke in here somewhere, but I don’t want to digress. Or do winners have to pretend to be losers lest someone think an attorney who has litigated against banks for years and holds a broker’s license be considered anything even remotely resembling an expert in the areas of foreclosure defense or mortgage litigation? If I’m ever in need of a brain surgeon, should I only trust one that really downplays his surgical skills and neuro-anatomical knowledge? Are all doctors who set themselves out to the public as experts or having experience nothing but frauds and practitioners who should be avoided like the plague? Good thing the DRE does not regulate the medical profession.

    As for the goal of “taking and getting some of your money,” let me go out on a limb here. I know that the lawyers in my law firm are probably the only ones in the entire western half of the United States which practice law to make a living, but it’s only because we don’t have day jobs. If my high school guidance counselor had just pressured me into shooting for a cushy nine-to-five plus generous bennies with some quasi-governmental agency that oversees highly educated professionals, I wouldn’t have to filch money from people in exchange for providing them with knowledge, skill, and experience; Knowledge, skill and experience that came from years of study at a high-priced law school, countless long nights pouring through legal texts (well, it’s actually online texts, but they were poured through just the same), and battling unnecessarily aggressive defense counsel with overly inflated egos and psychotic personalities that make Hannibal Lecter seem like the better choice for my next dinner guest. Yes indeed, services such as the ones offered by my firm should be free. Unfortunately, I too have a mortgage and bills to pay.

  • PaulMolinaroEsq

    THIS IS PART THREE

    Just a thought here, but would it be okay for lawyers with impressive track records to claim to have impressive track records? Or do winners have to pretend to be losers? There’s a Charlie Sheen joke in here somewhere, but I don’t want to digress. Or do winners have to pretend to be losers lest someone think an attorney who has litigated against banks for years and holds a broker’s license be considered anything even remotely resembling an expert in the areas of foreclosure defense or mortgage litigation? If I’m ever in need of a brain surgeon, should I only trust one that really downplays his surgical skills and neuro-anatomical knowledge? Are all doctors who set themselves out to the public as experts or having experience nothing but frauds and practitioners who should be avoided like the plague? Good thing the DRE does not regulate the medical profession.

    As for the goal of “taking and getting some of your money,” let me go out on a limb here. I know that the lawyers in my law firm are probably the only ones in the entire western half of the United States which practice law to make a living, but it’s only because we don’t have day jobs. If my high school guidance counselor had just pressured me into shooting for a cushy nine-to-five plus generous bennies with some quasi-governmental agency that oversees highly educated professionals, I wouldn’t have to filch money from people in exchange for providing them with knowledge, skill, and experience; Knowledge, skill and experience that came from years of study at a high-priced law school, countless long nights pouring through legal texts (well, it’s actually online texts, but they were poured through just the same), and battling unnecessarily aggressive defense counsel with overly inflated egos and psychotic personalities that make Hannibal Lecter seem like the better choice for my next dinner guest. Yes indeed, services such as the ones offered by my firm should be free. Unfortunately, I too have a mortgage and bills to pay.

  • PaulMolinaroEsq

    THIS IS PART TWO…

    The remainder of this essay breaks down (wherein “breaks down” is defined as “commenting on line by line”) this “Consumer Alert.” The point I am trying to get across to you, the reader, is that while there are many scam artists out there in the real estate and legal fields, there are more honest and hardworking professionals in these groups than scam artists. By scaring people away from the legal profession, the DRE is not doing a public service; in fact, quite the contrary. The DRE is doing a disservice to a public who has suffered at the hands of lenders for the last five years by telling them to avoid lawyers.

    “FRAUD WARNING REGARDING LAWSUIT MARKETERS REQUESTING UPFRONT FEES FOR SO-CALLED “MASS JOINDER” OR CLASS LITIGATION PROMISING EXTRAORDINARY HOME MORTGAGE RELIEF”

    Wow, quite an attention-grabbing headline. Notice the arrangement of terms which states that “marketers” request up-front money as opposed to the professionals who will be doing the work. This phrasing implies that the advertisers are asking for, and taking, money up front and that no up- front money is going to the people who are doing the work. And, in case you thought that a lawsuit where many plaintiffs sue a defendant was really called a “class action” lawsuit (as is the practice of every single text book in the law library of every single law school), this headline casts doubt on such a term by using the inflammatory phrase “so-called.”

    “By Wayne S. Bell, Chief Counsel, California Department of Real Estate”

    I would like to call Wayne S. Bell, Esq. a “So-Called Chief Counsel,” but I won’t. Oh, wait, I sort of just did. Never mind. Whether he truly represents the official views and opinions of the Department of Real Estate is a question begging for an answer. There are probably more than a few people over at the DRE who think that banks and mortgage lenders need to suffer substantial legal losses for the mess that they have caused. I hate to think that the entire Department has it in for consumer lawyers and real estate professionals.

    “I. HOME MORTGAGE RELIEF THROUGH LITIGATION (and “Too Good to Be True” Claims Regarding Its Use to Avoid and/or Stop Foreclosure, Obtain Loan Principal Reduction, and to Let You Have Your Home “Free and Clear” of Any Mortgage).”

    The DRE can’t possibly be stating, in the headline, no less, that litigation does not avoid or stop foreclosure, can it? The article following this headline probably carves out those rare exceptions where rogue attorneys make promises of millions of dollars, free and clear McMansions, and Viagra-free all nighters of loving for any and all plaintiffs who “sign up now.” Let’s see what they mean by reading more.

    “This alert is written to warn consumers about marketing companies, unlicensed entities, lawyers, and so-called attorney-backed, attorney-affiliated, and lawyer referral entities that offer and sell false hope and request the payment of upfront fees for so-called “mass joinder” or class litigation that will supposedly result in extraordinary home mortgage relief.”

    There’s that term “so-called” again. How snarky! A derisive term that belongs in an essay like the one you’re reading and not a consumer alert from a government agency. Again, I remind you that I’m not defending all attorneys and real estate professionals. I am defending the majority of honest and hard-working professionals who want to earn their livings by helping others. My law firm has encountered many unprofessional and downright dishonest attorneys and real estate professionals over the last few years. However, there are more honest and professional attorneys and real estate professionals out there than otherwise. The bad apples are the exception, and not the rule.

    “The California Department of Real Estate (“DRE” or “Department”) previously issued a consumer alert and fraud warning on loan modification and foreclosure rescue scams in California. That alert was followed by warnings and alerts regarding forensic loan audit fraud, scams in connection with short sale transactions, false and misleading designations and claims of special expertise, certifications and credentials in connection with home loan relief services, and other real estate and home loan relief scams.”

    And now, “BAM!”They jump right into it! It appears that the DRE views any professional who have chosen a career in real estate or real estate law and decided to make a living by charging homeowners for his or her professional services is a fraud. Whether it’s help with a loan modification, short sale, help reviewing loan documents, or providing legal representation in a Court of Law, the DRE seems to view the majority of these professionals as scam artists. Otherwise, why so many alerts? The DRE must have encountered tens of thousands of these criminal masterminds out there, and that is just in California!

    “The Department continues to administratively prosecute those who engage in such fraud and to work in collaboration with the California State Bar, the Federal Trade Commission, and federal, State and local criminal law enforcement authorities to bring such frauds to justice.”

    Now this one burns my buttocks more than just a singe. My law firm has represented literally more clients than I can recall off the top of my head in actions against real scam artists from loan modification scammers to foreclosure rescue scammers. We have represented consumers against both real estate professionals and other attorneys. In every single matter we worked which involved a DRE licensee committing a foreclosure rescue scam, we reported the wrongdoers to the California Department of Real Estate. My law firm would complete all the paperwork, make copies of all relevant documents, and forward those materials along with a cover letter thoroughly setting forth the illegal activities of the broker or agent licensee. In some instances an inspector from the DRE would call my office to thank me for sending in the complaint and assure me that they would take the matter seriously. However, not one time, did the California Department of Real Estate end up getting my clients back a dime from the scam artists. Not once! Seriously, not one time! My clients were left to file suit – at their own expense – against these entities in small claims court, because my clients had only been scammed out of a few thousand dollars each. Such amounts are enormous to my clients but well below amounts that should end up in Superior Courts let alone hire lawyers to recover. My desperate clients depended on the California Department of Real Estate to work against the true scammers on a case by case basis, weed out the bad apples, and get their money back. Instead, all the DRE did was issue blanket statements, dramatic alerts, and exaggerated warnings to scare everyone away from hiring professionals. This was wrong then, and it’s wrong now.

    “On October 11, 2009, Senate Bill 94 was signed into law in California, and it became effective that day. It prohibited any person, including real estate licensees and attorneys, from charging, claiming, demanding, collecting or receiving an upfront fee from a homeowner borrower in connection with a promise to modify the borrower’s residential loan or some other form of mortgage loan forbearance. Senate Bill 94’s prohibitions seem to have significantly impacted the rampant fraud that was occurring and escalating with respect to the payment of upfront fees for loan modification work.”

    Notice there’s no actual statistics – just the use of the term “significantly impacted” as to how much “rampant fraud” was occurring. As long as we’re just using generalizations, let me generalize, based entirely on my specific personal experience. What Senate Bill 94’s prohibitions did do was remove legitimate lawyers from the field of loan modification. My firm stopped accepting new loan modification cases last year. We did try the “pay later for the hamburger today” model required by Senate Bill 94 (now California Civil Code Section 2944.6) a few times. We did so as a test of our fellow human’s ethics. What we found should not have surprised us. More than once, we were successful in modifying a client’s mortgage to lower monthly payments, only to have the client verbally thank us for all the hard work and for saving said client’s home. However, when the bill for our services arrived, the happy client was dumbfounded and asked how we could expect to be paid when he or she had a mortgage to pay. This did not pan out to be a successful business model.

    In addition, after the passage of Senate Bill 94, my law firm saw an increased number of calls from potential clients who fell prey to loan modification scams. Much like making gun ownership criminal does nothing more than make it so that only criminals own guns, the scam artists were happy to see the honest competition removed from their field. As my friends at the NRA accurately point out, “If you outlaw guns, only outlaws will have guns.” Faced with less competition from legitimate businesses, the professional conmen stepped up their advertising and made sure to have a web of corporations and entities complex enough to vex anyone who even thought of suing for fraud.

    “Also, forensic loan auditors must now register with the California Department of Justice and cannot accept payments in advance for their services under California law once a Notice of Default has been recorded. There are certain exceptions for lawyers and real estate brokers.”

    While the “forensic loan audit” played a valuable role in mortgage litigation where rescission was a possibility, I do not see a large role for such audits in today’s no equity real estate market. Back in the golden days of positive equity, I personally reviewed loan documents for technical violations. The goal of my audit was to find enough illegalities to get the mortgage into court where it could be rescinded. However, as the market tanked, rescission became all but impossible – not because the law would not allow it – but because a home worth half of the mortgage balance is not a candidate for rescission. A forensic loan auditor in today’s real estate market is like a VHS deck repairman. On the topic of whether an audit of loan documents looking for missing dates and minor technical violations, I agree with the DRE that such services are much more often than not a waste of money and come with falsely inflated expectations. Only someone well-versed in RESPA and TILA and how those laws are actually used in court rooms can truly know what violations translate into solid lawsuits and which violations are of no significant legal consequence.

    “On January 31, 2011, an important and broad advance fee ban issued by the Federal Trade Commission became effective and outlaws providers of mortgage assistance relief services from requesting or collecting advance fees from a homeowner. Discussions about Senate Bill 94, the Federal advance fee ban, and the Consumer Alerts of the DRE, are available on the DRE’s website at http://www.dre.ca.gov. Lawyer Exemption from the Federal Advance Fee Ban — The advance fee ban issued by the Federal Trade Commission includes a narrow and conditional carve out for attorneys.

    If lawyers meet the following four conditions, they are generally exempt from the rule:

    1. They are engaged in the practice of law, and mortgage assistance relief is part of their practice.

    2. They are licensed in the State where the consumer or the dwelling is located.

    3. They are complying with State laws and regulations governing the “same type of conduct the [FTC] rule requires”.

    4. They place any advance fees they collect in a client trust account and comply with State laws and regulations covering such accounts. This requires that client funds be kept separate from the lawyers’ personal and/or business funds until such time as the funds have been earned.

    It is important to note that the exemption for lawyers discussed above does not allow lawyers to collect money upfront for loan modifications or loan forbearance services, which advance fees are banned by the more restrictive California Senate Bill 94.”

    This is where you have to go read the information cited by the DRE for yourself. The federal advance fee ban had a little common sense written into it as it made exceptions for attorneys. However, California’s version has no such sensible exceptions, at least none of any value. The State Bar of California provided its interpretation of the California law, and its interpretation made the ban apply in full force to attorneys such that even placing client money into a trust account was prohibited.

    “But those who continue to prey on and victimize vulnerable homeowners have not given up. They just change their tactics and modify their sales pitches to keep taking advantage of those who are desperate to save their homes. And some of the frauds seeking to rip off desperate homeowners are trying to use the lawyer exemption above to collect advance fees for mortgage assistance relief litigation. This alert and warning is issued to call to your attention the often overblown and exaggerated “sales pitch(es)” regarding the supposed value of questionable “Mass Joinder” or Class Action Litigation.”

    Strangely no mention yet that there may be some legitimate attorneys out there who are truly battling the big banks on behalf of abused homeowners. Well, I’m sure the DRE will address how to locate the good attorneys later in this “alert and warning.” Let’s keep reading.

    “Whether they call themselves Foreclosure Defense Experts, Mortgage Loan Litigators, Living Free and Clear experts, or some other official, important or impressive sounding title(s), individuals and companies are marketing their services in the State of California and on the Internet. They are making a wide variety of claims and sales pitches and offering impressive sounding legal and litigation services, with quite extraordinary remedies promised, with the goal of taking and getting some of your money.”

  • PaulMolinaroEsq

    TAKE THE LATEST DRE WARNING WITH A GRAIN OF SALT!

    Just When the Tide Was Turning Against the Banks… the California Department of Real Estate Comes to Their Rescue!

    If you found this essay during your Internet travels or other research, you likely have a basic understanding of, and an interest in, the mortgage meltdown, the collapse of the real estate market, the foreclosure crisis, the billions of dollars in bailout money given directly to banks and indirectly to their CEOs, the tribulations suffered by families who begged for loan modifications, the farce of giving bogus trial loan modifications to borrowers with one hundred and fifty percent (or more ) loan to value ratios, and the reasonless denials for permanent modification after successful completion of a trial modification plan foisted upon borrowers who were ignorant enough to believe that their mortgage lenders would give them a permanent loan modification if they just passed the three-month test known as a trial loan modification.

    At law firm of Fransen & Molinaro, LLP, we have represented borrowers in California State and Federal litigation matters against national mortgage lenders and banking institutions for about five years. We know, first hand, that the lenders hire extremely competent and fiercely aggressive counsel for every case brought against them. There are almost no limits to what these well-heeled defense law firms will do to win a case, whether that case is brought by a crackpot plaintiff who downloaded and filed a rambling and incoherent two hundred and seventy-eight page complaint (not counting attachments) drafted by people who believe that the United States Constitution prohibits the payment of income tax or whether that case is brought by a skilled consumer attorney representing an elderly couple about to be evicted as a result of failing to repay a predatory loan which was made in flagrant violation of every state and federal lending law on the books. Lawsuits against lenders are met scorn and ridicule by lenders’ lawyers. These zealous advocates of lenders’ rights file motion after motion, refuse to provide adequate responses to even the most basic of discovery requests, continue foreclosure and eviction attempts during the lawsuit, practice delay tactics, and make overt threats of countersuit against not only the plaintiffs but personally against the plaintiffs’ attorneys.

    Those consumer attorneys courageous enough to represent sympathetic plaintiffs who have solid cases find themselves embroiled in time-consuming and expensive lawsuits. The convoluted state and federal statutes governing the mortgage industry constantly change. The State and Federal Court rulings which should act as guide to proper interpretation of these ambiguous statutes more often than not do no more than provide conflicting statutory interpretations based on the personal opinions and whims of appellate judges.

    Until recently, the majority of the millions of troubled borrowers who chose not to sue their lender simply applied for loan modifications, an endeavor akin to the Three Little Pigs begging the wolf to become a Vegan. Seeking only to get affordable monthly housing payments, these homeowners had no desires to get involved in lawsuits that would take years to resolve. Furthermore, these homeowners did not have the enormous amounts of cash that such lawsuits would require. Unfortunately, time has shown that the mortgage lenders were no more lenient with people who applied for loan modifications that with those people that sued. The loan servicers (also known as henchmen for mortgage lenders) have been no less aggressive in their handling of applications for loan modifications than the attorneys who defend the lenders in courts.

    Many people who, after months of struggling with their lenders, receive trial loan modifications feel immediate relief, because they believe that their lenders are finally ready, willing, and able to provide affordable monthly payments. However, such exuberance is usually short-lived. Experience now shows that many trial modifications are nothing more than clever ploys to extract extra payments from borrowers just before foreclosure. This scheme provides lenders with an opportunity to control housing inventory and prevent gluts of bank-owned repos from hitting a particular areas all at once, much as dams prevents flood waters by controlling flows. This scheme provides lenders with payments from borrowers that they otherwise would never receive. This scheme provides lenders with a facade to present to the media and governmental officials as part of their efforts to convince others that they really are helping the American People. When trial modifications, as more and more now do, end in rejections and foreclosures, homeowners have very little options left to save their homes. Generally, the only two options left at this end point are bankruptcy or lawsuit.

    Faced with the reality that banks are not truly willing to help most people, and faced with the experience that many trial loan modifications are nothing more than scams to extract cash from borrowers right before foreclosure, many consumer law attorneys began representing these borrowers in lawsuits against lenders. Because these borrowers: (1) have the same stories (i.e. “similar fact patterns”); (2) were all victimized in the same way (i.e. “have the same causes of action); and (3) with similar fact patterns and the same causes of action were often victimized by the same lender, these suits are perfect for plaintiff joinder. Plaintiff joinder lawsuits allow multiple plaintiffs to file one lawsuit in which the plaintiffs jointly seek similar relief based on similar fact patters and the same causes of action. In a nutshell, one example of such a lawsuit in this field would allege, through many specific causes of action, that a lender acted in bad faith by representing trial modifications as a step to permanent modification.

    Fransen & Molinaro, LLP believes that lenders act fraudulently and illegally when they deny permanent loan modifications to borrowers who paid in full and on time every month during the trial periods. The advantages of plaintiff joinder lawsuits are many and include, but are not limited to: (1) less costs to each plaintiff; (2) less court-time and resources; (3) fewer contradictory rulings and judgments; and (4) more predictable outcomes and thus more reasonable expectations for the parties to the lawsuits. Fransen & Molinaro, LLP believes that such lawsuits are soundly grounded lawsuits, and such lawsuits have a better chance of success for the plaintiff-homeowners than for the defendant-lenders. Our belief is bad news for lenders who practice these tactics.

    However, those of you reading this essay should not be worry that honorable banks will collapse or that their highly principled corporate executives will be filing for personal bankruptcy protection. Fear not that deadbeat homeowners who borrowed billions of dollars and who now refuse to repay, because repayment would lay ruin to their highfalutin lifestyles, finally have a legal weapon to use against lenders. The California Department of Real Estate has, once again, come to the rescue of the banks! Just like they did for the banks when troubled borrowers sought legal help with loan modifications, the California Department of Real Estate has lumped the good with the bad – thrown out the baby with the bathwater, if you will – and issued a proclamation which, in effect, states that in matters where attorneys represent consumers against lenders in plaintiff joinder lawsuits, those plaintiffs’ attorneys are scam artists.

    Visit the following website to read the “Consumer Alert” issued in March of 2011:

    http://www.dre.ca.gov/pdf_docs

    THIS IS PART ONE

  • PaulMolinaroEsq

    TAKE THE LATEST DRE WARNING WITH A GRAIN OF SALT!

    Just When the Tide Was Turning Against the Banks… the California Department of Real Estate Comes to Their Rescue!

    If you found this essay during your Internet travels or other research, you likely have a basic understanding of, and an interest in, the mortgage meltdown, the collapse of the real estate market, the foreclosure crisis, the billions of dollars in bailout money given directly to banks and indirectly to their CEOs, the tribulations suffered by families who begged for loan modifications, the farce of giving bogus trial loan modifications to borrowers with one hundred and fifty percent (or more ) loan to value ratios, and the reasonless denials for permanent modification after successful completion of a trial modification plan foisted upon borrowers who were ignorant enough to believe that their mortgage lenders would give them a permanent loan modification if they just passed the three-month test known as a trial loan modification.

    At law firm of Fransen & Molinaro, LLP, we have represented borrowers in California State and Federal litigation matters against national mortgage lenders and banking institutions for about five years. We know, first hand, that the lenders hire extremely competent and fiercely aggressive counsel for every case brought against them. There are almost no limits to what these well-heeled defense law firms will do to win a case, whether that case is brought by a crackpot plaintiff who downloaded and filed a rambling and incoherent two hundred and seventy-eight page complaint (not counting attachments) drafted by people who believe that the United States Constitution prohibits the payment of income tax or whether that case is brought by a skilled consumer attorney representing an elderly couple about to be evicted as a result of failing to repay a predatory loan which was made in flagrant violation of every state and federal lending law on the books. Lawsuits against lenders are met scorn and ridicule by lenders’ lawyers. These zealous advocates of lenders’ rights file motion after motion, refuse to provide adequate responses to even the most basic of discovery requests, continue foreclosure and eviction attempts during the lawsuit, practice delay tactics, and make overt threats of countersuit against not only the plaintiffs but personally against the plaintiffs’ attorneys.

    Those consumer attorneys courageous enough to represent sympathetic plaintiffs who have solid cases find themselves embroiled in time-consuming and expensive lawsuits. The convoluted state and federal statutes governing the mortgage industry constantly change. The State and Federal Court rulings which should act as guide to proper interpretation of these ambiguous statutes more often than not do no more than provide conflicting statutory interpretations based on the personal opinions and whims of appellate judges.

    Until recently, the majority of the millions of troubled borrowers who chose not to sue their lender simply applied for loan modifications, an endeavor akin to the Three Little Pigs begging the wolf to become a Vegan. Seeking only to get affordable monthly housing payments, these homeowners had no desires to get involved in lawsuits that would take years to resolve. Furthermore, these homeowners did not have the enormous amounts of cash that such lawsuits would require. Unfortunately, time has shown that the mortgage lenders were no more lenient with people who applied for loan modifications that with those people that sued. The loan servicers (also known as henchmen for mortgage lenders) have been no less aggressive in their handling of applications for loan modifications than the attorneys who defend the lenders in courts.

    Many people who, after months of struggling with their lenders, receive trial loan modifications feel immediate relief, because they believe that their lenders are finally ready, willing, and able to provide affordable monthly payments. However, such exuberance is usually short-lived. Experience now shows that many trial modifications are nothing more than clever ploys to extract extra payments from borrowers just before foreclosure. This scheme provides lenders with an opportunity to control housing inventory and prevent gluts of bank-owned repos from hitting a particular areas all at once, much as dams prevents flood waters by controlling flows. This scheme provides lenders with payments from borrowers that they otherwise would never receive. This scheme provides lenders with a facade to present to the media and governmental officials as part of their efforts to convince others that they really are helping the American People. When trial modifications, as more and more now do, end in rejections and foreclosures, homeowners have very little options left to save their homes. Generally, the only two options left at this end point are bankruptcy or lawsuit.

    Faced with the reality that banks are not truly willing to help most people, and faced with the experience that many trial loan modifications are nothing more than scams to extract cash from borrowers right before foreclosure, many consumer law attorneys began representing these borrowers in lawsuits against lenders. Because these borrowers: (1) have the same stories (i.e. “similar fact patterns”); (2) were all victimized in the same way (i.e. “have the same causes of action); and (3) with similar fact patterns and the same causes of action were often victimized by the same lender, these suits are perfect for plaintiff joinder. Plaintiff joinder lawsuits allow multiple plaintiffs to file one lawsuit in which the plaintiffs jointly seek similar relief based on similar fact patters and the same causes of action. In a nutshell, one example of such a lawsuit in this field would allege, through many specific causes of action, that a lender acted in bad faith by representing trial modifications as a step to permanent modification.

    Fransen & Molinaro, LLP believes that lenders act fraudulently and illegally when they deny permanent loan modifications to borrowers who paid in full and on time every month during the trial periods. The advantages of plaintiff joinder lawsuits are many and include, but are not limited to: (1) less costs to each plaintiff; (2) less court-time and resources; (3) fewer contradictory rulings and judgments; and (4) more predictable outcomes and thus more reasonable expectations for the parties to the lawsuits. Fransen & Molinaro, LLP believes that such lawsuits are soundly grounded lawsuits, and such lawsuits have a better chance of success for the plaintiff-homeowners than for the defendant-lenders. Our belief is bad news for lenders who practice these tactics.

    However, those of you reading this essay should not be worry that honorable banks will collapse or that their highly principled corporate executives will be filing for personal bankruptcy protection. Fear not that deadbeat homeowners who borrowed billions of dollars and who now refuse to repay, because repayment would lay ruin to their highfalutin lifestyles, finally have a legal weapon to use against lenders. The California Department of Real Estate has, once again, come to the rescue of the banks! Just like they did for the banks when troubled borrowers sought legal help with loan modifications, the California Department of Real Estate has lumped the good with the bad – thrown out the baby with the bathwater, if you will – and issued a proclamation which, in effect, states that in matters where attorneys represent consumers against lenders in plaintiff joinder lawsuits, those plaintiffs’ attorneys are scam artists.

    Visit the following website to read the “Consumer Alert” issued in March of 2011:

    http://www.dre.ca.gov/pdf_docs/ca/ConsumeAlert_WarningreMassLitigation.pdf

    THIS IS PART ONE

    • Homeless

      Stumbling upon this site just before becoming one of the suckers out of blind desperation not to loose my house, I have been awaken to the reality of my situation with Bank of America and admit defeat. Going from the angle that I had been sold as being a victim of predatory lending I almost became a victim of predatory attorneys. I will loose my house, but at least not another five grand to the smooth talkers of The Real Estate Law Center. Was hoping for a modification after the banks received there bailout to much to ask?

    • JohnnyBoy

      They only gathered some of these conmen calling themselves attorneys figthing for homeowners. There are still some out there doing the same scam. Only shady lawyers are marketing this scam.

    • JohnnyBoy

      They only gathered some of these conmen calling themselves attorneys figthing for homeowners. There are still some out there doing the same scam. Only shady lawyers are marketing this scam.

Get My FREE Get Out of Debt Guy Newsletter

It is the smart thing to do.

I promise to keep your email safe and secure.

Close

I want to keep you posted each weekday with just one email about the latest get out of debt news, scam alerts and information to beat back debt.

You can unsubscribe at any time with just one click.

After you subscribe, check your email to confirm your subscription. If the confirmation email does not appear in your inbox in a few minutes, check your spam folder for it. Sometimes it likes to annoyingly hide there.


  • It will keep you posted on the latest scams.
  • You will be alerted to the latest articles.
  • You will wind up smarter than everyone else dealing with debt.