Law Firms

Judges Crack Down on Law Firm ‘Foreclosure Mills’

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Judges across the country are noticing deficiencies in foreclosure suits, some of them filed by law firms that handle thousands of cases a year.

Such high-volume “foreclosure mills” typically receive a set amount for each case; the pay in Ohio, for example, is $1,000 a case, the Wall Street Journal (sub. req.) reports.

“In general, most of the firms that practice this kind of law do a very good job,” Cleveland-area lawyer Peter Mehler told the newspaper. But some firms “have cut corners.”

Judges are cracking down on firms that file foreclosures suits without proof that the plaintiff holds the mortgage. The needed documents can be difficult to locate when mortgages are transferred multiple times or when ownership documents are held at a document repository company for trustees of mortgage-backed securities.

The New York Times has also reported on the problem, highlighting a case in Ohio in which a judge tossed 14 foreclosure cases because Deutsche Bank National Trust Co. could not prove ownership of the properties.

In other cases, law firms representing creditors in bankruptcy proceedings are wrong about the amount creditors owe. In one case, a Texas bankruptcy judge fined Barrett Burke Wilson Castle Daffin & Frappier $75,000 for computer-generated pleadings that were “grossly erroneous” and “gibberish,” the Wall Street Journal says. The firm says it has taken steps to eliminate the problem.

Story corrected on 07/16/2008 to change “company” to “country.”

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