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February 3, 2012

Foreclosure Prevention Tactics Spotlighted at ABA Midyear Meeting

Ranie Thompson is managing attorney of the foreclosure defense unit of Southeast Louisiana Legal Services in New Orleans.

Ranie Thompson is managing attorney of the foreclosure defense unit of Southeast Louisiana Legal Services in New Orleans.

At an ABA Midyear Meeting panel discussion Feb. 2 on foreclosure issues, an Atlanta litigator who serves the mortgage industry joined a New Orleans legal services lawyer who specializes in foreclosure defense and two Washington, D.C., affordable housing advocates.

But no fights broke out—literally or figuratively—despite what might appear to be differences in perspective between the three nonprofit-based panelists and Michelle Canter, who represents mortgage bankers, loan servicers and related clients from the Atlanta office of Washington-based Lotstein Legal.

That’s because, as the title of the ABA Commission on Homelessness and Poverty session suggested and the panelists agreed, preventing foreclosure is “A Win-Win Solution for Everyone.”

Canter put it another way.

“Foreclosure is a lose-lose situation for everyone involved,” she said. “There are no winners in this at all. I can assure you that none of my banker-lender clients want to own one more property anywhere in this country. And no neighbor wants to have one more foreclosure here in their neighborhood.”

National foreclosure numbers are staggering. In December 2011, according to panelist Ranie Thompson, managing attorney of the foreclosure defense unit at Southeast Louisiana Legal Services in New Orleans, 1 in every 634 housing units in the United States received a foreclosure filing, and she expects the numbers to worsen.

Thompson reviewed processes and procedures generally and in Louisiana for foreclosure defense and referred the audience to the ABA’s best-selling book Foreclosure Defense: A Practical Litigation Guide.

But as Canter cautioned, “One size doesn’t fit all. … All the rules are different, and they’re changing daily. … What works for a borrower in Florida doesn’t work for a borrower in Kansas.”

Tenants are victims, too

Another troubling perspective on the foreclosure crisis was provided by Jeremy Rosen, policy director for the National Law Center on Homelessness and Poverty in Washington, D.C. He spoke of “a group of folks we don’t always talk about,” the tenants who live in foreclosed properties and may be evicted even thought they’ve always paid their rent on time and otherwise played by the rules.

Rosen recapped the federal Protecting Tenants at Foreclosure Act, signed into law in May 2009 and amended by the Dodd-Frank Act in July 2010. The PTFA, which is due to sunset at the end of 2014, is “a very, very unique law” because of its unprecedented federal foray into the landlord-tenant realm, which is traditionally a state or even local matter, Rosen said.

Among other things, Rosen explained, the PTFA requires that most tenants in foreclosed properties generally are guaranteed at least 90 days’ notice to vacate.

Some states and localities have extended rights for renters beyond those in the federal law, Rosen said. Additional information on such laws can be found in the Law Center’s report, “Staying Home.

Lawyers and mortgage rescue scams

A disturbing aspect of the foreclosure crisis is the participation of lawyers in mortgage rescue scams, said Rutledge Simmons, deputy general counsel of NeighborWorks America and a member of the ABA Commission on Homelessness and Poverty. Of more than 10,000 complaints of such swindles reported to the Lawyers’ Committee for Civil Rights Under Law, more than a quarter involved legal representations, he said.

“Thus, a terrible situation was made even worse,” Simmons said.

Simmons said it can be easy for lawyers to be lured into such activity, which can be lucrative but unethical or illegal, especially if they innocently decide to collaborate professionally with loan providers or real estate agents. He said an effort is underway in the ABA to enlist bar associations to help combat lawyer participation in mortgage rescue scams, which is described in more detail in an article he wrote for the ABA Business Law Section.

Simmons said lawyers who do not specialize in housing law can refer distressed homeowners and tenants to the U.S. Department of Housing and Urban Development’s website on avoiding foreclosure.


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