Beware of Bait and Switch Pricing by Foreclosure Defense Lawyers!

 

In February 2010, I wrote a blog post that explained the four primary pricing methods ( hourly, flat fee, monthly and hybrid) used by foreclosure defense firms.  To read the whole blog post on this subject click here.  I have recently noticed a trend where lawyers and law firms are using marketing strategies that in my opinion are bait and switch tactics. 

If a consumer sees a sign that says SALE – Unleaded Gas - $2.00 per gallon, most consumers know that the price is to good to be true and will be looking for the catch.  Perhaps the price is only good for the first gallon of gas or is only good with purchase of an alignment job at an inflated price.  Gas stations in 2013 can’t sell gas for $2.00 a gallon because it costs the gas station more than $2.00 to buy the gas. 

Unfortunately, many consumers will not know that a the promise of a $1,000.00 or $1,500.00 flat fee foreclosure defense is just about always an offer that is to good to be true.  We are seeing consumers come to our office after either firing their old lawyer or after their old lawyer withdrew from their case.  In many cases the consumer saw advertising material and thought they would pay a one-time fee of $1,000 or $1,500.00 and would never need to spend another dime for the duration of their case.  Once the consumer actually visited the law firm they found out that the $1,000.00 was just an “initial” payment for the first thee or six months of their case.  After the initial period was over the consumer had to “re-hire” the lawyer for another six month or one year term ( it varies by firm) for an even higher fee.  

We think lawyers who advertise a flat fee price should offer true flat fee prices.  Nobody who comes to a lawyer’s office and spends an hour in a consultation thinking the costs is one number should find out when they read the fine print that over a two year engagement the price will be three or four times higher than the price they saw on the web.

At Shuster & Saben, we aspire to have a simple, clear, understandable, and predictable billing method.  The client (on loans of under $500,000.00) pays $495.00 per month for the first hour we work each month and any additional hours we work are on a pure contingency fee basis, where we do not get paid at all unless we win the case and get the fees paid as prevailing party attorney’s fees paid by the losing bank.  Our clients do not have to worry about paying a few thousand dollars to renew for six months or a year when their case is on the eve of settlement or trial and might soon we won or settled in a matter of weeks.  Our clients can predict and budget for their legal expenses.

For the likes of me, I can’t figure out how a lawyer can take a foreclosure case on for $1,500.00 and litigate the case for three years and take the case to trial all for $1,500.00.  Some flat fee lawyers cut corners with short form answers, and do not bother to conduct discovery, take depositions, or engage in trial preparation.  Perhaps other flat fee lawyers can make it work by buying $2.00 gas.

Foreclosure Win Results in $17,500.00 Attorney Fee Recovery

When the Foreclosure mill law firm David Stern, P.A. collapsed many lawyers who defend foreclosures were content to sit on their hands and wait six months to a year for the banks suing their clients to send the files to other law firms.  Of course Shuster & Saben is NOT  like most firms that defend foreclosures.  Firm attorney Richard Shuster saw the collapse of David Stern as an opportunity to cut off  the head of a sleeping snake.

After the Stern firm failed to respond to requests for admission served by Shuster on behalf of a foreclosure defense client, Shuster filed a motion for summary judgment in favor of the homeowner.  The Stern firm did not withdraw form the case and Wells Fargo did not assign the case to new counsel.  Shuster then set a hearing on the motion for summary judgment. 

Despite their receipt of the notice of hearing, David Stern did not have an attorney present at the hearing.  When the judge called the firm to allow them to attend the hearing by phone the lawyer who the receptionist directed the Judges call to did not take the Court’s call. Since Wells Fargo's lawyers ( David Sern, P.A.) failed to respond to requests for admission that Wells Fargo did not own the note and a request for admission that Wells Fargo did not hold the note summary judgment and final judgment were entered in favor of the homeowner.  After the win the foreclosure defense attorney Richard Shuster filed a motion for attorney’s fees. 

Shuster was concerned if the firm immediately sought to collect attorney’s fees Wells Fargo might move for relief from the judgment arguing that they accidentally failed to send the file to new counsel.  As such Shuster waited one year from the date of judgment so that the time for Wells Fargo to seek relief form judgment ( 1 year under the rule) expired.  Once the time for Wells Fargo to seek relief from judgment expired the firm went forward with its motion for attorney’s fees.  Wells Fargo’s new lawyers, Aldridge Conners argued that the homeowner should not be entitled to attorney’s fees.  This argument was rejected by the Court which found for the Defendant on attorney fee entitlement.  The day before the hearing on the amount of attorney’s fees Wells Fargo and their new counsel agreed to pay $17,500.00 to resolve the attorney fee claim. Our client not only won their case  ( a final judgment win not a mere dismissal ) get money back from the fees recovered from Wells Fargo. 

Principal Reduction Loan Modification & Foreclosure Settlement in Under Sixty Days

Old Payment $1,596.31 – New Payment $954.17.

On April 26, 2012, a nervous couple sat down with foreclosure defense attorney Richard Shuster, for a free consultation at Shuster & Saben’s Melbourne office.  Ten days earlier the couple had been served with a summons, lis pendis, and a complaint ( law suit) to foreclose on their Viera, Florida home.  The couple had had not make a mortgage payment in over fourteen months, and owed approximately $230,000.00 on a home worth approximately $175,000.00.  The couple came to Shuster & Saben, at the recommendation of a co-worker whose foreclosure case was won by Attorney Shuster.

The firm filed a notice of appearance for the homeowner on April 30, 2012, and a fifteen page Answer to the complaint on May 7, 2012.  At the same time he served the firm’s Answer, Shuster opened lines of communication to Ocwen ( the loan servicer ) and to opposing counsel to attempt an expedited settlement.  Shuster fast tracked this case toward settlement based on the fact that the loan servicer was Ocwen with whom the firm has a large number of principal reduction settlements and because the homeowners were only 25% upside down.  The plaintiff that had filed the foreclosure action was Bank of New York Mellon as Trustee for the Certificate Holders of Poplar ABS Inc.  Shuster was further encouraged by the fact that this trust had no prohibition against principal reductions and had made other principal reduction settlements.

On June 8, 2012, the firm received an offer (dated June 5, 2012) from Bank of NY Mellon’s attorney.  Shuster forwarded the offer to the client the same day, and E-mailed the bank’s lawyer that the offer was accepted.  Once the client was ready to wire their first payment the settlement documents were executed and faxed to Ocwen and Bank of NY Mellon’s counsel on June 27, 2012. 

The settlement reduced our clients loan balance from approximately $230,000.00 to $185,000.00 and reduced their interest rate from 7.5% to 3.78%.  Our client’s monthly payment went from $1,596.31 (principal & interest only) to $954.17 (principal & interest only).  Over the remaining 23 years of their mortgage term our clients will save $177,230.64 which is based on a monthly savings of $642.14 per month times 276 months.  Our clients will not only keep their home and the roof over their children’s beds, they will also be in a far stronger position when they retire in a few decades.  Our clients’ return for their investment in foreclosure defense was over $30.00 of savings for every dollar they invested. 

To Review the Settlement Agreement Clink the Link Below:

Settlement Agreement

About Shuster & Saben:  Shuster & Saben thinks that the best foreclosure defense lawyers are problem solvers.  We look at and discuss our clients finances, home value, loan balance, and personal objectives before explaining their options and helping our clients make well informed decisions.  We evaluate asset protection, tax consequences, and the strengths and weaknesses of the banks' cases and look at all potential solutions including litigation, deed-in-lieu, loan modification, short sale and on very rare occasions referral to a bankruptcy lawyer.  We charge more than those foreclosure lawyers using cookie cutter, one-size fits all, stall tactics but we work our cases and are proud of our results.  See our older post for court orders from our victories and other loan medication settlements.

Enormous Principal Reduction Loan Modification

Old Principal Balance:  $213,834.00

New Principal Balance:  $66,000.00

Percentage Savings:  69%

Old Principal & Interest Payment:  $888.62

New Principal & Interest Payment: $312.06

Shuster & Saben, LLC recently obtained a principal reduction loan modification for a Palm Bay, Florida homeowner that cut his mortgage by over 69%.  When the client came to the firm in March of 2009 he already had a loan modification offer in hand.  Before he ever hired a lawyer the loan servicer, Ocwen Loan Servicing, LLC offered the homeowner an “Trial Modification” that after a successful trial modification would have reduced interest rate on the loan to 3.95% for five years.

When the homeowner met with foreclosure defense attorney, Richard Shuster for a free review of the loan modification offer he wanted to know the pros and cons of accepting the offer versus defending the foreclosure action.  Shuster advised that the offer was a band-aid the would, in the short term, make the home more affordable but in the long term would do absolutely nothing to solve the client’s huge negative equity problem.  The client owed over $215,000.00 on a home in Palm Bay worth about $80,000.00 (in 2009) that was continuing to lose value in a declining real estate market.  Further, after five years the 3.95% interest rate would end and the client would be stuck with a very high interest rate of his original mortgage that was nearly 8%.

The foreclosure lawsuit filed against the homeowner alleged that the loan on his home was owned by a securitized trust.  Shuster explained to the homeowner several of the weaknesses in the foreclosure action filed against him.  Ultimately, the homeowner decided it was better and far cheaper to fight the foreclosure than to accept a bad loan modification offer.

For over two years the firm defended the foreclosure action.  Along the way the firm obtained Court orders directing the lender to produce various documents that the lender's counsel failed or refused to turn over.  During this time the client made no mortgage payments and therefore his loan balance grew from $213k to approximately $240k.  While tightening a vice on the lender’s case with discovery court orders, attorney Shuster sent out an olive branch to the lender’s attorney and Ocwen offering to settle the case if they would cut the client’s loan balance down to $66,000.00.  Shuster ‘s settlement offer included the client’s current property appraisal form the Brevard County property appraiser.  Ocwen in turn sent back a settlement offer that mirrored most of the terms set forth in Shuster’s offer.  Unlike Ocwen’s first offer that had 3.95% interest for only five years, the new offer has a 3.92% interest rate for the life of the loan.

Both the original 2009 offer and the 2012 offer are linked at the bottom of this blog entry.  Please view both of these offers to see what a difference fighting a foreclosure can make.  During the two and half years we defended this case our client saved over $18,000 that he would have spent on rent or mortgage.  The principal reduction saved him an additional $147,834.  For ever dollar invested in foreclosure defense he saved over ten dollars in housing expenses.  For obtaining this huge principal reduction our firm qualified for a small contingent bonus that will be paid out over a year.  Our client thinks this is a great deal and one he can easily afford with a principal and interest payment of only $312.06 for the next twenty-four years. 

SEE THE LOAN MOD OFFERS HERE

2009 OFFER

2012 OFFER

Shuster & Saben is a law firm for smart homeowners who understand the difference between foreclosure defense and foreclosure delay.  We think a good outcome if a foreclosure case is one where the bank’s case is dismissed or settled under terms solve or substantially diminish the homeowners financial problems.  A good foreclosure defense lawyer in a problem solver with the ability, desire, and stamina to fight like heck for their client.  We are not the firm for everyone and there are other foreclosure defense firms who change less.  To arrange a consultation to see if your case meets our requirements and we meet yours please call offices as follows:  Melbourne  (321) 622-5040, Fort Lauderdale (954) 423-0052, Miami/Doral (305) 629-8806 or e-mail foreclosuredefenselaw@gmail.com.

The Robin Hood Law Firm

One of the coolest things we get to do as a foreclosure defense lawyers is write checks to clients.  Most clients hire our firm under an arrangement in which they pay us a flat fee each month for the first hour we work on the case and any additional hours are worked on a pure contingency basis.  Under such an arrangement if we want to get paid for the rest of our time we need to win the case and recover attorney’s fees from the bank.  When we get foreclosure cases dismissed or win cases on summary judgment or at trial, we go after the banks and servicers to get paid for the rest of our time and to obtain reimbursement for our clients for the attorney's fees they previously paid. 

Redacted check issued to client after firm obtained dismissal of Wells Fargo's foreclosure case and obtained a judgment against the bank for attorney's fees.

If you scroll though our blog you will find quite a few attorney fee judgments that order banks and loan servicers to pay attorney’s fees to our firm.   One of our clients asked why we put fee judgments and fee checks up on our blog.  The reason is to let homeowners know that that some of the time homeowners win and that when they go shopping for a lawyer what law firm they choose makes a difference.  Some lawyers who represent homeowners confuse foreclosure delay with foreclosure defense.  To us foreclosure defense means fighting foreclosure cases with a goal of winning a significant portion of our cases and finding solutions through settlement, loan modification, short sale or deed in lieu for the rest of the cases when possible.  Our sophisticated clients want more than knee-jerk, cookie-cutter, stall tactics.  We evaluate our clients' cases with an big picture view that considers asset protection and tax consequences. 

When we win cases and recover fees from the bank our fee judgments are usually sufficient to return to the client a substantial portion for the fees the client previously paid.  This past week, I got to write a check for $2,651.00 to a foreclosure defense client of our Melbourne office.  We obtained a dismissal without prejudice of the client’s case after Wells Fargo’s lawyers failed to timely comply with a Court order.  For the past five months there has been no pending foreclosure case against our client ( the bank has not re-filed), our client has made no mortgage payments, and he has had no legal expenses.  Now the client has received a check to reimburse him for more than half of his prior legal expenses.

To see a redacted copy of the check to our client full size in a separate window click the link below:
Redacted Check 

Fat File Lawyers vs. Thin File Lawyers

Pictured Above:  Actual Shuster & Saben Case file from case where firm defeated 

U.S. Bank and their counsel Doug Zahm, P.A. 

In April a foreclosure case our firm had been defending for well over two years was scheduled for summary judgment hearing in Brevard County, Florida.  Generally if a bank files a motion for summary judgment and “wins” the hearing on their motion, the case is for all practical purposes is over and all that is left is for the Court to administratively set a sale date, sell the property, transfer title to winning bidder at the foreclosure auction, and issue a writ of possession to remove the home’s former owner.

Summary judgment hearings are either “special set” meaning a hearing usually fifteen minutes in length is scheduled for a specific time before a specific judge or set on a “cattle-call” mass docket where thirty to one hundred cases have summary judgment hearings set for the same time and the court goes through all of the cases set in an hour or two.  Our case was set on a cattle call docket with ninety seven cases.  When I arrived at 9:00 for the haring, I learned our case was number eighty-eight  on the judge’s list of cases set for the morning.  Thankfully, I bought something to read.  It was going to be a long morning.  While re-reading the case law I would present to the Court when our case was called, I watched the hearings of other lawyers and unrepresented homeowners.  In most of the cases nobody showed up for the homeowner.  In every case where there was no homeowner present and no lawyer present for the homeowner, the bank’s motion for summary judgment was granted and a sale date was set. 

When the first contested case where the homeowner actually had a lawyer present was called,  I looked up from what I was reading to see a confident colleague walk to the lectern with a file as thick as a telephone book. The homeowner's attorney explained “ Judge we have rescheduled the bank representative’s deposition three times at their request but the deposition has not happened yet.  The case is not ripe for summary judgment because discovery is not compete. “    After a brief rebuttal from the bank’s lawyer the Court denied the bank’s motion.

Three Year Old Foreclosure Case Settled with Short Sale

When the recession of 2008-2010 hit, a young Florida mom’s employer closed and in a short span of time she faced financial hardships of both unemployment and divorce.  In her divorce she kept the family home in Palm Bay, Florida.  Unfortunately, the value of the property fell more than 60% when the local real estate market collapsed.  She now owed nearly $150,000 on a property worth less than $50,000 and her limited income from unemployment was insufficient to pay her mortgage.  When Space Coast Credit Union filed a foreclosure action against her in 2009, the homeowner traveled to a legal aid office in Daytona Beach where a legal aid lawyer helped her draft a do it yourself ( Pro Se ) Answer. 

The homeowner originally obtained the loan on her home from Space Coast Credit Union ( SCCU) who in turn sold the loan to the Federal National Mortgage Association, also known as Fannie Mae or FNMA.  In 2009, SCCU filed a foreclosure action against the homeowner which she defended herself through 2009 and part of 2010.  In 2010, the homeowner found a job as a legal assistant and attempted unsuccessfully to modify her mortgage.  In 2010 after mediation was unsuccessful and Space Coast’s lawyers filed a motion for summary judgment the homeowner hired Melbourne Florida foreclosure defense attorney, Richard Shuster, to defend the foreclosure action.

Shuster & Saben defended the foreclosure action for two additional years during which time the homeowner made no mortgage payments.  During the three years that the client made no mortgage payments she was able to use the savings to provide for her family, and later after finding employment, to replenish her savings that were wiped out by unemployment and divorce. 

Shuster went on the offensive in the foreclosure action and deposed Space Coast’s corporate representative.  The firm hoped to win the case under a theory that the proper plaintiff was Fannie Mae the loan owner and not the loan Space Cost the loan servicer.  The firm used testimony from the deposition to defeat Space Coast’s motion for summary judgment. Unfortunately, the Court denied the motion for summary judgment the firm filed on behalf of the homeowner.  Since the Court denied both sides’ motions for summary judgment the case would ultimately have to be resolved by trial.