CALIFORNIA HOMEOWNERS FINDING IT TOUGHER TO OBTAIN ATTORNEY FORECLOSURE ASSISTANCE

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time. Now they face yet another obstacle: hiring a lawyer, according to a New York Times report yesterday. Lawyers throughout California say they have no choice but to reject clients because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the state legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts. The law, which has few parallels in other states, was devised to eliminate swindles in which modification firms made promises about what their lawyers could do, charged hefty fees and then disappeared. But foreclosure specialists say there has been an unintended consequence: Honest lawyers can no longer afford to assist homeowners who feel helpless before lenders that they see as elusive, unyielding and skilled at losing paperwork. Homeowners whose cases were handled improperly have little way of knowing it, and even if they found out, they would be hard-pressed to challenge a lender without a lawyer. The problem for lawyers is that even a simple modification, in which the loan is restructured so the borrower can afford the monthly payments, is a marathon, putting off their payday for months if not years. If the bank refuses to come to terms, the client may file for bankruptcy, in which case the lawyer will never be paid.

http://www.nytimes.com/2010/12/21/business/21foreclosure.html?_r=1&emc=eta1