Normally when someone owns a distressed property, he or she consults with a Las Vegas bankruptcy lawyer to discuss possible solutions. Not everyone does, however, and some people hope the problem will solve itself, or worse, fall for a scam. Recently, the New York Times reported on a new type of scam that targets distressed property owners: “mass joinder foreclosure lawsuits.” A mass joinder is a type of class action lawsuit, and in the case of foreclosure, it involves a group of homeowners joining together to sue lenders to obtain mass loan modifications or stop foreclosures. Here’s how they work.
(1) A firm—not an actual law firm—sends out solicitations via direct mailings to homeowners whose mortgages are underwater, in default, or approaching foreclosure.
(2) The firm offers the benefits of participating in a mass joinder lawsuit: reduction in interest rates, principal reductions, halt foreclosures, obtain money damages, and even handing them title to their properties free and clear of their mortgage obligations.
(3) Unlike a class action lawsuit, a mass joinder requires the plaintiffs to pay in advance of joining. In mortgage situations they ask for up to $10,000 up front to pay legal fees. The firm then does nothing, merely accepting the money without providing a service.
(4) According to the Federal Trade Commission (FTC) [http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt082.shtm], mass joinder lawsuit firms sometimes have only one attorney on its payroll. This attorney does not look over any “client’s” mortgage, and often is not licensed to practice law in the plaintiff’s state, which is a violation of FTC rules. In some circumstances, homeowners discuss their cases with an unqualified sales representative who gives out inaccurate information and makes deceptive claims about their expertise.
Homeowners who are underwater or facing foreclosure are in a precarious situation, but there’s no good in handing over your money to people who contacted you by mail and made sweeping claims about the results they can obtain for you. An experienced Las Vegas bankruptcy attorney is a far better option to being defrauded.
For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 702-880-5554 to set up your free consultation.