Photo (cc) by 401(K) 2012
We’ve devoted lots of cyber-ink and lots of video tape to our nation’s ongoing foreclosure crisis. Here’s a partial list of the stories we’ve done in just the last six months:
- Countrywide rips-off homeowners by jacking foreclosure-related fees by more than $100 million
- Forced-place homeowner insurance rip-offs
- Tired robo-signers let others sign their names
- Foreclosing on people who aren’t behind in their mortgage
- Banks use back taxes to seize homes
- What’s behind the robo-signing foreclosure mess and why it matters to all of us (3-part series)
These stories are all different, but they have a couple of things in common. First, they chronicle how our nation’s largest lenders often skirted the rules when dealing with homeowners. They deserved the bad press: In many cases, the acts they committed would have landed mere mortals like us in court and possibly jail.
One other thing linking the stories above is that in each one, the bank is the bad guy and the guy wearing the white hat is the person who represents the homeowner – the foreclosure defense lawyer. Three of the ones I met in putting together the stories above worked in cramped conditions, didn’t appear to make much money, and seemed about as close as you can come to real-life Davids selflessly battling Goliaths.
But I recently met a fourth foreclosure defense lawyer who made it clear that, when it comes to foreclosure defense, maybe that white hat is really more a shade of gray. Check out the story below, then meet me on the other side for more.
As you just saw, this is one lawyer who feels that if he can get a mortgage dismissed entirely, he deserves to collect a fee of 40 percent of that mortgage. And ironically, he’ll put a mortgage on his client’s house to collect it.
In his defense, there are a couple of things you should know that weren’t in the video story. The first is that Tickten claims that his firm was one of the first to uncover many of the defenses (for example, robo-signers and misplaced mortgage notes) that other lawyers are now using to help homeowners. It was his lawyers who years ago started flying around the country, deposing bank employees and bringing bank improprieties to light. Other defense lawyers following in these footsteps wouldn’t have been aware of the defenses now in widespread use unless he and others like him had invested the time, energy, money, and know-how to uncover these issues. He insisted that, until he and a few others came along, foreclosures were basically rubber-stamped, and almost never successfully defended against.
Tickten also points out that having a mortgage dismissed is no easy task, nor is it common. It takes a long time and a lot of legal work, with no guarantee of success. (Tickten’s clients do, however, pay a retainer of $335 to $650 a month. If he doesn’t succeed in getting the mortgage eliminated, the Tickten firm still earns that fee – if he is successful, it’s credited against the 40 percent contingency fee.)
So if he wins, his client has no mortgage: The house is theirs free and clear. In his mind, that warrants a 40 percent fee secured by a new mortgage. And as I said in the story above, he also says if that amount proves onerous to the homeowner, he reduces it.
Tickten further defended his fee structure by pointing out that lots of lawyers charge a contingency fee in similar circumstances. His analogy from the story above: “If I do that in a case where you lose your leg and I get a million dollars for you, I get 40 percent of that. So if I do the same thing in a case where I save you a million dollars on the mortgage on your home, I should be able to get the same amount.”
What you didn’t hear in the story above was my response to his statement. Check out the video below for more of what Tickten said…and what I said back to him.
In the end, Tickten believes that if he saves his client a million bucks, he deserves $400,000. After all, he says, in the land of law, that’s the way it works and that’s what gives him the incentive to take on cases like these. The Florida Bar may not agree: The Tickten Group’s fee structure is now under investigation.
But Tickten is right about one thing: That’s the way a lot of lawyers work. But maybe he should step outside the land of law and take note of the countless people in jobs who make or save millions for their employer and never dream of harvesting 40 percent of the take. If that’s the way it worked in every job, we’d all have the incentive to work harder, but our economy would probably collapse under the weight.
Tickten calls his fee structure fair – I call it a rip-off. What do you call it?