Bank Owned Property Listings Revvep Up by Law Firms

by Donald Hanz on Foreclosure Crisis

The growth of bank owned property listings is replicated by the growth of several law firms specializing in helping banks pursue foreclosures on delinquent homeowners and other property owners.

Over the past several years, a number of law firms have been sharply growing because of record numbers of foreclosure actions that need to be filed and pursued on behalf of lenders. They do legal research work, file foreclosure papers, issue default notices, attend hearings and take back foreclosed properties.

To squeeze more profits from the business of pursuing foreclosures, law firms have instituted easy-to-follow standardized operating procedures so that personnel like clerks and paralegals can carry out procedures quickly and cheaply. With lower operating costs, smaller law firms can beat bigger law firms during biddings for foreclosure work.

Smaller law firms often accept payments as low as $1,000 or $1,200 per foreclosure case from banks.

In Tampa, law firms have been filing around 2,000 foreclosure cases each month in the circuit court of Hillsborough County on behalf of banks. One law firm, Florida Default Law Group, accomplishes more than 300 new foreclosure cases per month in Hillsborough. Other law firms capitalizing on the record growth of bank owned property listings in the area are Shapiro & Fishman, David J. Stern and Marshall C. Watson.

Law firms, both small and large, have developed a model that would improve profits without affecting the results. They hire lower-paid clerks, support staff and paralegals to handle routine legwork and then hire newly graduated lawyers to sign lawsuits and resolve complications. Typically, six to ten support staff and paralegals assist one lawyer, with one group handling title documents, another team handling foreclosure lawsuits and another group delivering legal documents to third parties.

Under Florida state law on foreclosure proceedings, law firms can process a lot of foreclosure cases and therefore earn a lot because they can avoid expensive hearings as long as the affected homeowners do not object to the foreclosure lawsuits.

The law allows the award of lawyer’s fees as long as the amounts are reasonable or the legal charges do not exceed three percent of the loan principal balance at the time of the foreclosure lawsuit.

According to analysts, bank owned property listings continue to grow because most distressed homeowners do not object to foreclosure filings, explaining that they do not have the means to hire lawyers to fight for them.