When a homeowner’s finances are running on empty, how does a foreclosure defense attorney get paid? Peter Ticktin of the Ticktin Law Group in Deerfield Beach came up with a creative solution: if their law firm successfully works to have a foreclosure dismissed and the existing mortgage/liens reduced, then the client will take out a second mortgage on their home to pay the firm.

According to this morning’s Miami Herald, creative solutions like the one implemented by Ticktin are growing in popularity as Florida homeowners continue to struggle against the threat of foreclosure. Some of these creative financing ideas, however, are being challenged. Are they ethical and legal? Or are they “creepy” and “crass”? As attorney Mark Stopa wrote:  

“As I see it, instead of trying to make their services as affordable as possible, these lawyers are trying to figure out how much they can get away with billing.  I’m also troubled at the ethical quagmires created by these fee arrangements… are the Ticktin lawyers going to give conflict-free advice to a client about bankruptcy if Ticktin has a second mortgage on the client’s home?  How can they?  Ticktin and the homeowner are directly adverse – the homeowner wants to eliminate the mortgage, which could happen via bankruptcy, whereas Ticktin wants to enforce it, which a bankruptcy would preclude.  Undoubtedly, Ticktin’s representation to that client about the benefits of bankruptcy are impacted by its own interests in keeping the mortgage intact.”   

What is an objective standard for judging reasonable fees as thousands of Floridians flock to busy foreclosure defense lawyers for help? Ticktin alone has 3,000 foreclosure clients, and the Sun-Sentinel reported that Florida’s housing market is still flatlining even as California’s housing market begins to recover. According to an AARP article, the foreclosure rate in the Miami/Broward area ranks 7^th in the country, “with one out of every 41 homes in some stage of foreclosure.” The Cape Coral/Fort Myers area ranks second on the list.

Given such challenging times, what do you think of foreclosure defense attorneys’ creative financing arrangements? Please click here to leave a comment!