POSTED: Monday, February 22nd, 2010 at 1:00 am

BY: dmc-admin

Not too surprisingly, the down economy has meant an upward swing in business for attorneys who concentrate in foreclosure.

RealtyTrac reported earlier this month that foreclosure filings were pending on 3,710 Wisconsin homes in January 2010. A year ago, that number was 2,699. Milwaukee County and southeastern Wisconsin are the hardest hit areas of the state.

About a dozen years ago, Brookfield attorney Deborah A. Blommer, then a solo, did occasional foreclosures for her lender clients. These days, she’s a named partner in a firm with seven other attorneys who practice creditors’ side law exclusively, with foreclosures occupying the bulk of most workdays. In fact, they’ve added staff to help with that aspect of the firm’s practice.

On the other side, Michael P. Maxwell, of Maxwell Attorneys LLC in Wauwatosa, estimates he used to counsel somewhere between three to five borrowers/clients per month about foreclosure-related issues. Now it’s about three to five people per day.

Yet on the borrowers’ side, despite the obvious need for lawyers, few have responded, says Milwaukee attorney Edward W. Harness, of Harness Law Offices LLC. He notes the Legal Aid Society recently sponsored CLEs to bring attorneys up-to-speed on foreclosure law, but while many attended, few are actually representing homeowners in need. A February 2009 report from the Milwaukee Foreclosure Partnership Initiative concluded that some 90 percent of borrowers in foreclosure are pro se.

Maxwell and Harness say there’s a popular perception that representing borrowers is a losing proposition. But it’s also a complicated mix of state and federal law — no one dabbles in foreclosure.

In addition, having a critical mass of cases is the only way to make the practice financially viable, says Blommer. On the creditors’ side, lenders pay according to fee schedules that are uniform across the nation, and emphasize efficiency. It doesn’t make sense from an economic perspective to tackle the learning curve unless you have a volume of prospective clients and cases.

What to do

On the borrowers’ side, these cases can be hard to win.

“It’s an uphill battle because most people who are behind on their mortgages don’t think lawyers can help,” says Harness. “It’s hard to get people to talk to them about what their options are. They’ll just give up.”

In some cases, a lawyer may be able to prevail by raising issues of standing or improper service of process, or alleging violations of the Truth In Lending, Real Estate Settlement Procedures, Fair Credit Reporting or Home Ownership Equity Protection Acts.

Harness notes that bankruptcy and foreclosure often go hand-in-hand. Sometimes filing under Chapter 13 is the best option, particularly if there was a temporary interruption in revenue and the mortgage truly is affordable.

“And in some cases, we talk about walking away from the property,” he says. “With property values plummeting as they are, especially in the City of Milwaukee, it sometimes doesn’t make any sense for property owners to hold onto an asset.

“We’re talking about strategic default more often these days. It might not be good public policy, but banks are walking away sometimes, too.”

Another option Harness has heard of is “‘cash for keys’ programs, where people agree to surrender a home early in good condition to sign over the quitclaim deed. It’s better than walking away.”

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