Lenders scrambling to find qualified attorneys to oversee backlog of foreclosure cases.
News came out this week that foreclosures fell in November to their lowest levels in the past 18 months (http://tiny.cc/92wrq). This seemingly positive data is clearly a result of the foreclosure freeze enacted by most banks following the revelation that lenders improperly handled millions of foreclosure cases. As lenders and loan servicers scramble to correct these mistakes, they are having trouble finding qualified attorneys to manage the foreclosure cases. In Massachusetts, as well as many other states, only a handful of firms handle all of the foreclosure cases. These law firms bid for contracts with Fannie Mae and Freddie Mac in order to receive the foreclosure work. In order to make a profit, however, these firms are forced to hire lower paid associates to manage the high-volume, low-paying cases. As Fannie and Freddie recently discovered, entering into contracts with firms that employ inexperienced attorneys, and in some cases ‘coverage attorneys’ that work on a case-by case basis, invariably leads to mistakes being made. Lots of mistakes. Larger law firms and more experienced attorneys are turning down the work because it is not profitable. With a national uproar over aberrant foreclosure practices, Fannie and Freddie have apparently taken a strong interest in their new legal help. Unfortunately, there is a shortage of experienced attorneys that already know residential foreclosure law and lenders are reluctant to proceed with more foreclosures until they find qualified firms willing to take the cases.
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