Another Bad Day At The Foreclosure Mill….

sat·ire/ˈsaˌtī(ə)r/Noun – The use of humor, irony, exaggeration, or ridicule to expose and criticize people’s stupidity or vices, particularly in the context of contemporary politics and other topical issues. Wikipedia

[The following bit of satire is intended to be read immediately before or after my recent post regarding a class action lawsuit filed against Lender Processing Services and a foreclosure mill law firm, entitled, In Re: Harris. – Phil]


Slam!  Bang!

Her: “Honey, is that you?”

Him: “Yeh.”

Her:  “What is it now? Is the Firm getting to you again?  You must be glad it’s Friday.”

Him: “Which question do you want me to answer first?”

Her: “Honey, don’t take things out on me – I’m just concerned about you.”

Him: “I know. Sorry.  I’ve just had it up to here with the Firm.  Every day that goes by, I hear the drumbeat of press coverage about lender and servicer abuses, and fraud being perpetrated on the courts by the bank and servicer attorneys.  I’m starting to become concerned for myself if the Firm should come under the spotlight.”

Her: “What do you mean, ‘under the spotlight’”?

Him: “Well, last week another firm – OK, OK, a ‘foreclosure mill – got named in a class action complaint.  The lawsuit was what we call an “adversary proceeding” arising out of alleged fraudulent practices by Lender Processing Services and its law firm, in the Florida bankruptcy courts.  So far, it’s just a claim – and anyone can sue anyone today – but the allegations are starting to hit home.  I need a drink.  Do we still have some of the Devil Springs® Vodka left from the bottle B.L. Zebub gave us for Christmas?”

Her:  “Honey, that’s 160 Proof!  You only had a couple of drinks after you opened it and you didn’t sober up until New Year’s Day.  B.L. Zebub may be the Firm’s largest banking client, but his taste in beverages runs to the extreme.  I think he’d be just as happy drinking from a can of paint thinner.”

Him: “Good! That way I’ll forget about this past week.”

Her: “Honey, this sounds serious.  Tell me what’s going on.”

Him: “Well, the short version is that a few years ago, we were approached by B.L. Zebub, who asked the Firm if we’d be interested in joining his “Network.”  This Network consisted of a couple of hundred law firms nationally that would be fed tons of default servicer work – that’s “code,” for creditor foreclosures and bankruptcies.  He guaranteed us “more legal work than we could imagine in our wildest dreams.”  He said all we had to do was sign a simple little agreement with a Company that would procure foreclosure and bankruptcy work from some of the biggest lenders and servicers in the country.  We would act as the lawyers for the Company, and also for all of its clients at the same time.  We would handle all the foreclosure and bankruptcy legal work for the Company’s clients.  The only catch was that we were required to hire the Company for certain “administrative and technology” services they were to provide us during our foreclosure and bankruptcy proceedings.”

Her: “So? I don’t see anything wrong with that?  The Company brings you clients and you in turn agree to employ the company for the support services you need for the bankruptcy and foreclosure litigation.  By the way, what “Company” is this?  Have I ever heard of them?”

Him: “I don’t know if you’ve ever heard of them.  It’s called Charon Default Servicing.”

Her:  “Ugh! ‘Charon’?  I remember that name from my Greek Mythology classes in college. That was the name of the old man who ferried the souls of the dead across the River Styx into Hades.  Catchy business name.  And these are the folks you’ve hooked up with?  Maybe you should tell me more….”

Him: “Wow!  I never knew that.  Anyway, you’re right about how it looks. On its surface it seems harmless enough.  Just a little horizontal marketing.  But this is where it gets kinda weird.  You see, Charon doesn’t charge its clients for any of the servicing work it does for them.  It’s absolutely free! So for all of the troubled loan files that Charon takes on, the clients don’t pay a dime for the default servicing work.  The only requirement is that the client must use one of the law firms in Charon’s “Network” of law firms.  Charon requires that we sign an agreement that actually sets forth a fee schedule for the legal services we’re providing to its clients.  These are the amounts we are to submit to court for recovery of our fees. Then at the same time, Charon sends us a bill for their “services.”  But the problem is that the “services” Charon is billing us for actually appear to be the very things that Charon would normally be providing for a fee to its own clients.  In other words, it appears Charon is getting a portion of our legal fees to pay for the non-legal work Charon is providing to its own clients.  We, in return, get huge volumes of legal work.  Obviously, this was too good to pass up for a lot of major servicers and lenders – and for us.  So Charon gets all the servicer and lender work, does their default servicing for free, and gets paid out of the legal fees awarded to us by the courts.”

Her: “But what does the court have to say about this when you disclose these payments in your fee petition?  If they’re alright with it, then maybe it’s OK.”

Him: …………………(silence)

Her: “Honey?  Did you hear what I said? Honey?  Honey, what’s wrong?”

Him: “We don’t disclose that information to the court. We can’t.  Part of our deal with Charon is that this little “arrangement” is subject to absolute confidentiality.  We can’t disclose it without Charon’s written permission – which of course, we’ve never asked for, nor could we ever expect to get – at least not if we ever wanted to remain in the Network.  And to make matters worse, we pay Charon for their “administrative fee” in advance – right after they refer the file to us.  They don’t even bother waiting to provide an actual “service” or send a progress billing.  So, yes, it looks kinda suspicious – like we’re paying for the referral, and not for any substantive service.

Her: Swell!  So you’re committing a fraud on the court by concealing the fee splitting; you’re sharing legal fees with non-licensed people; and you’re paying money for the referral of legal work.  If you were in a race to get disbarred, I’d say you just hit the Trifecta.  I think I’ll join you for one of those Devil Springs® Vodkas, so I can forget we ever had this discussion.  Anything else you haven’t told me?”

Him: “Well, just one other thing….  The Firm says B.L Zebub is requiring that not only all of the Firm’s partners and associates have to sign the confidentiality agreement about the Charon “Network” deal, but our spouses do so, as well.  So, I’ve got a copy in my briefcase for you to sign.”

Her: “Pardon the cliché, Honey, ‘But when Hell freezes over….’”