California Bar Throws Baby Out with Bathwater

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Hat tip to Darrel Blomberg who brought Mandelman’s article (below) to my attention.

Editor’s Analysis: In case you you ever wondered where that expression came from, it is pretty simple. It was once the practice to allow the man to bathe first, then the wife then the children in order of their age — all in the same tub without changing the water. By the end of this process the water was so murky that it was actually possible to throw the baby out with the bathwater.

The banks are attempting every maneuver to keep the mortgage and foreclosure process as murky as possible with considerable success, especially when it comes to modification where they are required to “consider” modifications although they are not required to accept a modification proposal.

The truth is they don’t consider it, they intentionally “lose” the paper work a half dozen times before they realize that the person is likely to escalate to litigation, and then they send a notice of rejection.

This rejection, few people realize, is subject to challenge if your allegation is that they rejected it without considering it. If your allegations contain proper pleading about the details you submitted with your modification proposal, including the proceeds to investor under your plan versus foreclosure, and it is an obvious no-brainer, I have evidence that such suits are settled very quickly usually along the same terms as those proposed in the original modification proposal from the borrower.

Now it is true that hundreds of companies have started claiming to do modifications without being able to spell it, and without any license that provides any evidence that they know anything about property rights, mortgages, notes,  lending, HARP, HAMP, TARP, TILA or RESPA and it is equally true that these bogus companies have compounded predatory lending with predatory services (fraud). So the states have enacted various laws that ignore the real problem and did what the banks want — prevent access to those who are licensed and who can effectively advocate for their client, before, during or after modification attempts, foreclosure or eviction.

The basic thrust of most such laws is to prevent any such company from collecting fees until the end of their services which means that such companies would need to invest in a mortgage deal, the benefits of which go solely to their client.

The proper way of handling this is through the existing web of lawyers, HUD counselors, realtors etc. who are all properly regulated and if they charge fees that are too high or fail to do the work, their license if disciplined with fines, suspension and even revocation. There are hundreds of thousands of such professionals around that would gladly assist homeowners, but who have no interest in loaning the expenses of representation to clients whom they barely know.

California has now extended this idiotic approach to lawyers as well, which means if the retainer smells like there is a modification possible, they are not allowed to charge any fees until the end. This obviously denies the homeowner from access to counsel, access to the courts, due process and equal protection under the law. Hopefully that rule, passed around November 12, 2012 will be brought before the California Supreme Court will be treated summarily. It’s bad for homeowners, lawyers, and all other licensed professionals who could provide valuable services in litigation, settlements, modifications, short-sales and wrongful foreclosure suits.

So right now, in California, the banks and pretender lenders can all use attorneys, realtors and others and pay then up front, salary, or anything else but the people against whom they are pressing illegal foreclosures are not allowed to hire such professionals because it could end up in a modification, which everyone agrees is the proper end to this mess.

PRACTICE HINT: Any lawyer or group of lawyers may file a rule challenge which MUST go to administrative  hearing and then (after exhaustion of administrative remedies) can go to court for contest or confirmation. Hearing officers are not ordinarily allowed to rule on constitutional issues, so you’ll end up in court pretty quick.

California State Bar RECENT Decision to Cause More Harm to Homeowners in Foreclosure

Tags: ACCESS TO COUNSEL, ACCESS TO COURTS, CALIFORNIA, CALIFORNIA BAR ASSOCIATION, due process, EQUAL PROTECTION, modifications
Posted in bubble, Corruption, Eviction, securities fraud |