Paulette Breen sensed something was wrong when her home loan modification made her mortgage payments more expensive.
Suspecting fraud, the Van Nuys resident hired a lawyer to sort things out.
That only made things worse.
The attorney told her there was indeed fraud, and promised to sue the bank and get her a new loan. She paid him $8,000 upfront and he advised her to stop making her mortgage payments while the matter was being pursued in court.
That turned out to be very bad advice. Now, the attorney has been disbarred for a host of complaints from multiple clients, and Breen, a cancer survivor, is about to lose her home of 20 years.
"I'm scared," Breen said. "I've done everything the way I've been brought up - I pay my bills, I don't bother you. I don't even have a parking ticket. And I'm losing everything."
Breen is among more than 1,000 potential victims of attorneys across the state who are targeting homeowners facing foreclosure as part of the fallout of the mortgage crisis that began in 2007.
These attorneys charge fees with the promise of stopping the foreclosure, but then don't follow through with the case and disappear with the money, according to Laura Ernde, spokeswoman for the California State Bar, which has reported a spike in these types of cases.
Since 2009, the State Bar - which created a task force in 2009 solely to focus on the issue - has investigated 1,186 loan modification cases involving 153 lawyers, according to Ernde. So far, 69 attorneys in 581 cases have been disciplined and 18 cases have resulted in disbarment. About 720 cases are still pending and another 291 are under investigation.
"People were faced with losing their homes, so some attorneys were sort of preying on distressed homeowners," Ernde said. "They work with clients to pay upfront fees, promising them that paying would get them help with the mortgage so you can keep your house."
More than 2.1 million homeowners in California are underwater on their homes, according to the Campaign for a Fair Settlement, a national coalition advocating on behalf of distressed homeowners.
Glendale, Santa Clarita, Palmdale and Lancaster are among the cities in L.A. County that have the highest number of foreclosures, according to ForeclosureRadar, which tracks county recorder filings.
But there are no hard numbers on just how many homeowners have been victimized. Oftentimes, victims are immigrants or from low-income families, and may not know where to turn for help after they've been scammed.
"Is it happening very frequently? Absolutely," said Charles Evans, an attorney with the Los Angeles-based Legal Aid Foundation, which provides legal help for the poor. "We have seen dozens of these folks each just over the last year and for every one of those, there are dozens more that don't end up coming our way."
Sometimes, it's ignorance. Some of the consultants are real estate brokers who switched over to law or attorneys who may not be familiar with foreclosure laws, according to Evans.
But often, it's more sinister. Evans has handled cases where attorneys will place liens on the home to secure money they think they're owed, taking advantage of immigrants' lack of English skills and getting them to sign over deeds.
"They're just playing the odds," Evans said. "The folks that they target are desperate, they're scrambling from place to place to try and save their home. They rarely take the time to file a lawsuit or file a complaint."
Breen, an Emmy-winning TV producer, is neither an immigrant or poor - proof, she says, that anyone can fall victim to the scams.
"It's not just average middle-class people," Breen said. "It's people who do business, run a business, and get scammed."
Her former attorney, Ghassan "Gus" Bridi, who headed an Encino law firm, was disbarred in February after a State Bar investigation of his clients' cases, which also included those unrelated to foreclosures.
The Bar found that he had failed to perform with competence in Breen's case by failing to serve complaints or appear in court for hearings, allowing the bank's attorney to get the lawsuit dismissed.
His complaints involving other clients included failure to obey court orders, perform with competence and inform clients of developments in their cases.
Bridi could not be reached for comment.
In a statement to the State Bar, however, Bridi wrote that he had been struggling to cope with stress, anxiety and depression from his caseload.
"I managed to hang on and keep the practice afloat and deal with the challenges associated with a small practice," he wrote. "Though the daily mental stress associated with this and the lack of assistance quickly became overwhelming again, and again I began falling behind on a few files."
Another local attorney, Philip A. Kramer, of Calabasas, was being disbarred this month after the State Bar found that he was involved in a home loan modification scam that targeted financially strapped homeowners through mass mailers that looked like official documents from mortgage lenders.
This led the homeowners to think they were potential plaintiffs in a national litigation settlement, and they often paid $3,500 to $10,000 for retainer fees. But they were never contacted by an attorney or included in a lawsuit, according to the State Bar.
Kramer and his attorney did not return calls for comment.
But according to the State Bar, he admitted to numerous counts of misconduct including collection of illegal fees, failure to return advanced fees and accepting employment in states where he was not licensed to practice.
He has agreed to pay $122,000 in restitution to 27 former clients, according to the State Bar.
The homeowners often have few venues for recourse. One option is the State Bar's Client Security Fund, which pays capped amounts for victims of dishonest lawyers.
"The fact that they were taken advantage of by these guys doesn't help them at all on these mortgage issues," Evans said. "They may have spent their last money, and have nothing to deal with the banks. They've usually used up whatever time or whatever money they had to work out something."
Financially strapped homeowners are urged to check on potential lawyers through the State Bar's website for any disciplinary issues, or contact federal Housing and Urban Development-certified loan counselors for free assessments.
And never agree to upfront fees, as it's illegal, Evans said.
"If they're breaking one law, what makes you think they won't do anything else?" Evans said.
As for Breen, she's hoping the bank will give her more time to pay off her loan.
If not, her house may be up for a short sale or be auctioned off on June 6 - in both cases, forcing her out of the French country-style home she's lived in for 20 years.
"There's nothing worse than at 4 in the morning, you wake up, and you don't cry, because you can't," Breen said. "What you do feel is your stomach hit your back, and you can't breathe.
"I have beat cancer, I have beat chemo, radiation. They were easy," Breen said. "But losing your identity, that's what a home is. I don't know what I'm going to do."
By C.J. Lin, staff writer
Source: The Los Angeles Daily News