Lawyers mining foreclosure cases

NEW YORK, Oct. 21 (UPI) -- Improperly signed loan documents could generate a niche market for lawyers working to help clients stave off home foreclosure, officials said.

In one case, a couple has lived in their home without making a payment since 2004 after their lawyer discovered banking officials signed loan documents without verifying them, The Wall Street Journal reported Thursday.

Improper loan documentation forcing the delay or cancellation of home foreclosures turned up last month when it was discovered that tens of thousands of loan documents were "robo-signed" with little or no verification, the report said.

The fledgling niche belongs to a legal sub-specialty called foreclosure defense, a move commonly used in corporate litigation, and involves the taking of depositions from mortgage officials about loan documents they signed.

"There is a movement afoot by (state attorneys general) and private lawyers to use technical problems to avoid foreclosures where the borrower is in default and the foreclosure is in all respects substantively appropriate. These are lawyers where the best job they can do for their clients is to keep them in their houses without paying the mortgage," Andrew L. Sandler, a Washington securities lawyer who represents banks and firms that service mortgages, the newspaper said.

The issue could be further clouded if torts lawyers initiate class-action suits.

"The class-action lawyers are swarming around this issue right now, because they perceive that it can result in significant fees for them," Sandler said. "But they're not well-founded cases, and the banks will vigorously contest any class action around these issues."