A recent New York Times story, “Taking on a Second Mortgage to Pay Foreclosure Lawyer” reports that some Florida lawyers are charging contingency fees and securing them with second mortgages on the homes they help save from bank repossession.  With recent revelations that banks were “robo-signing” foreclosure documents, homeowners are flocking to attorneys to challenge their lenders.  This demand has lead to a new and growing practice; foreclosure defense, a practice whose strategies and techniques are still being worked out.

Among the law firms taking this new tack is the Ticktin Law Group in Deerfield Beach, Florida.  Peter Ticktin, who has some 3,000 foreclosure clients, says he plans to collect fees by taking another second mortgage on his clients’ properties has already been copied by other firms.  The Ticktin mortgages resemble the loans that the clients originally got from Countrywide, GMAC, and other lenders.  Each will be a contractual obligation with the law firm, labeled as a mortgage and structured like one, too, with the client paying a certain sum every month and using the house as collateral.

If the Ticktin lawyers cause the original mortgage to be nullified or reduced because of the bank’s misdeeds (i.e. robo-signing), the client must take out a new mortgage for 40 percent of the savings.  For example, if the new mortgage was $500,000 and is reduced by the bank to $200,000, the client would owe Ticktin 40 percent of $300,000, or $120,000, minus any legal fees paid by the losing bank as well as any monthly payments to the law firm.