The second mortgage only takes effect if the homeowner’s foreclosure filing is dismissed and the mortgage balance is reduced.
Ever since the robosigner debacle, homeowners have been pounding down lawyers’ doors to see if they too can spare their homes from foreclosure by exploiting the mistakes and potential fraud carried out by lenders and loan servicers.
But most of these homeowners aren’t in the best financial shape (obviously), so second mortgages seem to be the best way to ensure lawyers are actually paid for their work.
The method is being employed by the Ticktin Law Group in Deerfield Beach, Florida – and Peter Ticktin calls it a “new model, a new paradigm.”
If the lawyers are successful in saving the home and reducing the mortgage balance, the homeowner must take out a mortgage for 40 percent of the savings.
So if a $500,000 mortgage is reduced to $200,000, the homeowner would owe the law firm $120,000, less legal fees paid by the losing bank or mortgage lender.
Ticktin, who has 3,000 clients in foreclosure, said his method has already been copied by other law firms.
But you have to wonder how great an idea this is, considering the clients failed to make their mortgage payments to get into the mess to begin with – not exactly the ideal borrower.