Last week I wrote about the various ways that consumers can afford a foreclosure defense attorney. New York has passed a law allowing consumers to recoup attorney fees and at least one attorney in Florida is allowing clients, under certain conditions, to take a mortgage with his firm.
That practice might be short lived—he is now under investigation by the Florida bar.
The firm becomes the mortgagor
If the attorney is successful in defending the foreclosure or gets the loan modified (in a way that benefits the consumer), the client can then take out a second mortgage with him to pay his attorney fees.
The firm has maintained they would never actually enforce the mortgage or foreclose on the house in the event of non-payment. Still, the practice raised more than one set of eyebrows.
For one, the practice appears odd on its face. Two, most states prohibit lawyers from having a proprietary interest in the litigation. There are two general exceptions to that rule, but neither one suggests mortgages are appropriate. Given the multitude of other ways payment could be arranged, it seems odd this was the ultimate choice.
Nevertheless, the attorney stands behind his practice and maintains these mortgages are ethical and the only way to represent certain clients. Time will tell if the Florida bar agrees.