Law firm gorges on growing foreclosure market

If there’s one industry that’s not feeling the economy’s sting these days, it’s the business of filing foreclosure lawsuits. Recently, mortgage-servicing companies have been filing about 2,000 initial foreclosure documents every month in Hillsborough County Circuit Court. To handle the overwhelming caseload, armies of lawyers, paralegals and clerks at big foreclosure law firms have streamlined the art of separating homeowners from their homes.

Few are as large or as efficient as Tampa-based Florida Default Law Group, which processes at least 300 new foreclosure suits a month in Hillsborough County, court documents show.  By forging relationships with mortgage companies and focusing on volume, Florida Default Law Group offers to foreclose on a home at the bare-bones price of $1,200, about half the typical cost.

Dubbed foreclosure mills by some in the industry, these companies have turned the job into a factory-like process. Speed is the key to their success. “The only way their business model works is if they don’t lay eyes on the lawsuit,” said Jim Kowalski, a Jacksonville lawyer who has litigated against Florida Default Law Group.
To handle the workload, foreclosure mills have developed a common model: use lower-paid paralegals and support staff for much of the routine legwork, and hire young lawyers to sign off on the lawsuits and handle complications. 
Its clients aren’t banks, which long ago pooled their mortgages into securities and sold them to investors. Instead, Florida Default’s clients are the mortgage servicing companies that collect monthly mortgage payments from homeowners and, when necessary, foreclose on them. Often, major banks own the mortgage servicers.

Why these companies like dealing with mills is simple: With their efficient structures, they can underbid other law firms on foreclosures, which otherwise might cost thousands of dollars apiece. 

“It’s machinery,” said Hakanson, who practices real estate and bankruptcy law with a different firm in the Bay area. “We thought it was huge (in the 1990s) when we got 200 files a month, and now these firms are doing 1,000 or 1,500 a month.”

Attorneys who defend homeowners against foreclosures say they have trouble contacting Florida Default lawyers.  “They’re just extremely nonresponsive in the bankruptcy arena,” said Patrick Smith, a Tampa bankruptcy lawyer who occasionally deals with Florida Default. “I don’t think they’re structured to put too much time into any one case.”

Here in Palm Beach county, much like other counties in Florida, the County has gone to an eBay like system to dispose of the high number of forclosures. Currently, we are collecting them at the rate of about 2,500 per month.

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