This case involves a couple who hired an attorney to represent two of their corporations. There was a subsequent litigation involving the corporations. During the litigation, the couple agreed to give the attorney a mortgage on their home in order to pay the legal fees they owed as the result of the litigation. When the litigation was over, the couple executed a mortgage with the attorney in the amount of $41,300 to secure payment of the legal fees. The couple later defaulted on the mortgage and the attorney filed a foreclosure complaint against them. The attorney never advised the couple to seek the advice of another lawyer about entering into this type of agreement with their attorney.

A mortgage agreement between an attorney and a client where the purpose of the agreement is to secure payment for legal fees probably constitutes a “business transaction” between the attorney and the client. This type of agreement probably violates the Rules of Professional Conduct for the attorney since it represents a conflict of interest for the attorney. Under RPC 1.8, an attorney is prohibited from entering into a business transaction with a client or acquiring a pecuniary interest that may adversely affect the attorney’s representation of the client. Under RPC 1.8, an attorney entering into this kind of transaction must also advise the client about the opportunity of seeking independent counsel about the client’s choice of transaction. This type of agreement with a client is only allowed where the attorney reasonably believes it wound not adversely affect the representation of the client and the attorney gets the client’s informed consent in writing. The agreement in this case probably violated the Rules of Professional Conduct because the agreement was not fair and reasonable to the client. Also, the attorney failed to follow the rule that required him to advise the couple to seek the advice of another lawyer before they entered into the agreement. Under the Rules of Professional Conduct, an attorney has a duty to deal with clients in good faith and with the highest degree of fidelity. The agreement in this case is probably invalid since it violates the ethical rules governing the attorney-client relationship.

1. Does a mortgage agreement with an attorney to secure payment for legal fees constitute a “business relationship” with a client and is this forbidden by the rules of professional conduct?

Conflict of Interest Implicated When Attorney Enters Into Business Transaction With Client

This case involves a home owner who obtained a mortgage on his home. An appraisal of the home indicated a valuation of $1,250,000. Two years later, the home owner defaulted on the mortgage and the lender commenced foreclosure proceedings. The home owner never received notice of the foreclosure from the lender and he first learned about it when the lender placed a notice of eviction on his fence. The home owner regularly received personal mail and business mail through a post office box and not at his home. All other documentation about the mortgage had been sent by the lender to the home owner’s post office box. The lender started an eviction action in the city’s housing court. The home owner raised the defense that the notice of the eviction was defective.

In general, a homeowner may challenge a lender’s entitlement to possession of property in an action for eviction where the property was purchased at a foreclosure sale. In these cases, it is usually the lender who must establish their right to possession of the property. This is done by establishing legal title to the property. Legal title is established when the lender shows proof that the title to the property was acquired strictly according to the power of sale provided in the mortgage. In a case like this, the lender must show that they obtained a deed to the property and that the deed and affidavit of sale, were both recorded. In this case, the lender’s title to the property may be invalid because it failed to serve the homeowner with advance notice of the foreclosure sale. This type of notice is usually required by state law. In most states, a lender is required by law to mail notice of a foreclosure sale to the last address of the owner of the property that appears on the records of the mortgage holder. This type of law is enacted to protect homeowners from “self-dealing” by the lender who might take unfair advantage of the homeowner. In this case, since the lender did not mail notice of the foreclosure sale to the homeowner at his post office box, the mortgage was not properly foreclosed according to the power of sale. In order for the lender to have lawfully evicted The homeowner in this case, it would have to provide the court with an affidavit showing that the requirements of the power of sale and the applicable state foreclosure law had been complied with.

1. Can a lender evict a home owner without giving sufficient notice of the foreclosure sale to the home owner?

Real Estate Expert Witness Opines on Lender’s Failure to Follow Foreclosure Sale Law During Eviction Proceedings

A real estate expert witness advises on a case involving bankruptcy protection. Plaintiff is the trustee of the bankruptcy of the owner-debtor of a two-story residential building and the land it occupies and its real estate management company.

A creditor has asserted a first mortgage interest against the property securing an indebtedness purportedly owed to it by the debtors totaling more than $40 million, plus accruing fees, expenses and interest. The creditor commenced a foreclosure proceeding.

Both debtors sought Chapter 11 bankruptcy protection. The bankruptcy trustee is restructuring debts and liquidating assets.

The real estate market in this area continues to be strong despite recent downturns in the economy. Over the last year, any aged inventory has been purchased at prices supporting a stable in improving market. It is our opinion that this trend will continue as there is a strong demand for homes in this very popular area. The luxury rentals at issue in this case are units that offer all of the features that buyers are looking for. From the new kitchens outfitted with granite counters, stainless steel appliances, Italian ceramic and hardwood floors, Anderson Windows and solid wood new doors and moldings, these units will command a relatively higher sales price due to their total renovated look. The location is right across the street from a park that affords a great expanse of ball fields, bicycle and pedestrian tracks, basketball courts, playground, tennis courts, paddleball courts, bocce ball courts and most importantly a new state of the art senior center. After careful consideration of the units to be offered as condominiums, it is our opinion that the one bedroom/one bath units would be valued at $399,000 and two bedroom/one bath units would be valued at $499,000. The expert has been a real estate broker for more than 20 years and has managed similar projects. The expert’s firm has been selling cooperative and condominium units since its inception.

1. What is the condition of the real estate market in the area of the subject property? 2. What is the value of the units if offered as condominiums?

Real estate expert witness advises on bankruptcy protection for property owner

This case involves a Utah based mortgage company which did not act in accordance with property preservation. The plaintiff had a mortgage through the defendant. The plaintiff eventually fell behind on his mortgage and the defendant filed for foreclosure. The plaintiff’s home was sold at a foreclosure sale; the plaintiff filed chapter 13 bankruptcy to save the home. While in bankruptcy, he obtained a new loan through a state foreclosure prevention fund. The fund negotiated and paid all past due payments to the defendant. Following discharge, the defendant moved to sell the home pursuant to the original foreclosure order. The defendant hired another company to “secure the collateral,” locking the plaintiff out of his home while the foreclosure sale was pending. The plaintiff’s account was never reinstated upon payment of the money from the foreclosure prevention fund. It is alleged that the plaintiff was never actually in default on his mortgage. Also, the defendants did not act in accordance with certain guidelines/and or appropriate industry standard on property preservation.

I am a professor of real estate and bankruptcy law and have focused on the law of distressed real estate for more than 20 years. I am the author of a law school casebook on real estate transactions as well as numerous books, book chapters, and articles on real estate and mortgage law. I am also the co-editor and author of the Real Estate Law Report, a monthly newsletter on developments in real estate law. The central focus of my scholarship has been on foreclosure and creditor remedies, as well as real estate bankruptcy. I have familiarity with residential loan servicing standards and property preservation and extensive knowledge of contract and mortgage law. I know the requirements of the common law of property. I have served as an expert witness on two other cases in which I represented the borrower or guarantor on a defaulted mortgage, both commercial mortgage loans. I prepared materials in both cases. I have been retained in two other matters in recent years, each of which settled without my active involvement in the case.

1. Have you ever served as an expert witness on a case similar to the one described above? If so, please explain. 2. Please tell us why you're qualified to serve as an expert on a mortgage industry case? 3. Do you have extensive experience in the mortgage industry? 4. Do you have expertise on determining whether an individual is default on mortgage? 5. Do you have extensive knowledge of the guidelines/and or appropriate industry standard on property preservation?

Location: NY B.A., Yale University J.D., University of Pennsylvania Law School M.B.A., The Wharton School University of Pennsylvania Bar admissions, District of Columbia Member, American Bankruptcy Institute Member, American College of Real Estate Lawyers Member, Board of Editors, Banking Law Journal Honor, Grant Gilmore Award for Excellence in Legal Writing Former A******** A***** & P***** M***** o* t** B********* a** R************ P******* G**** a** o* t** R*** E***** G**** Former L** C**** T** H******** S* M***** T*** J** U***** S***** B********* C**** f** t** D******* o* C******** Former V*** D*** a** P******** o* L** a* H****** U********* S***** o* L** Former P******** a* N** Y*** U********* S***** o* L** a** B******* N* C****** S***** o* L** Current P******** o* L** a* a m**** u*********

West Coast

Utah

This highly qualified expert on bankruptcy, real estate and finance received his J.D. and M.B.A from the University of Pennsylvania. He has published widely on topics ranging from bankruptcy reorganization and liquidation, guaranties and suretyship, real estate law, and finance, and has more than 20 years of experience in bankruptcy law and restructuring. His work has included advising a "Fortune 50" company on potential bankruptcy strategies for handling mass tort litigation, serving as an economic expert in the Worldcom bankruptcy case, counseling multiemployer pension plans in a major Chapter 11 case, as well as serving as an expert witness in bankruptcy proceedings and other legal cases. He is a member of several professional organizations including the American Bankruptcy Institute, American College of Real Estate Lawyers, and the Banking Law Journal. He is currently a tenured law professor at a major university.

Mortgage Company Fails to Comply with Property Preservation Standards

The plaintiff in this case is the owner of the property located in Montana where the plaintiff has lived with her family for many years. The defendant seeks to foreclose on the property allegedly without legitimate basis. It is alleged that the default that triggered the notice of the trustee’s sale and the sale date came as the result of defendant’s intentional misconduct or institutional incompetence. The plaintiff claims that she has paid her mortgage in full, and has submitted all the paperwork requested by defendant throughout the course of the loan repayment period. Plaintiff paid her mortgage in full every month until, for reasons that remain unexplained, the defendant refused to accept plaintiff’s payments. It is this refusal to accept plaintiff’s payments which placed plaintiff in the alleged default. The plaintiff and her family now face the prospect of losing their home to foreclosure.

There is likely some piece of information missing. The problem with borrower cases is that they will say they made all of their payments in full and on time, but often when a full review is done, that was not the case. My initial questions would include the following: who was responsible for the escrows - i.e., hazard insurance and property taxes - and were they up to date? Were the borrower's payments returned to sender or were they put in a suspense account? Has a Qualified Written Request per RESPA section 6 been made to obtain all servicing records including origination documents, payment histories, and escrow account balances? Banks are not generally in the business of refusing payments made in full and on time, so unless the bank has made a rare and egregious error, the borrower is not disclosing everything.

1. Please explain your qualifications to review this case. 2. Are you familiar with the protocols major banks have in place to ensure transparency and proper documentation of all transactions with customers? Please explain

Montana

Homeowner Disputes Foreclosure, Cites Institutional Incompetence

Following a bank’s refusal to enroll their client into a government loan service in Delaware, she decided to sue. The client, a working single mother, had asked her employer for an advance payment due to financial hardship, believing she would soon be enrolled in the loan program through her bank. For the employer to give her hardship funds, however, it required a letter from the bank, which was requested multiple times without ever being sent. Additionally, some of the bank’s employees told the woman that she would soon be in the loan program, while others instituted foreclosure on her home and personal assets. The woman never received any reinstatement letter from the bank, and the ensuing lawsuit over loan benefits necessitated an expert in banking, specifically in dual tracking of foreclosing and pursuing business with a client simultaneously, the use of cash pooling, and service agreements.

To understand whether there was dual tracking in this case is first and foremost a question of timing. Negotiating business while still foreclosing on a client was not illegal throughout the United States until the Dodd-Frank Act restricted it as of January 2014, though there are requirements the bank will have to have met if this case occurred before then. However, before January 2014 only a handful of states had laws prohibiting dual tracking, so this may be unlikely. Having worked in investment banking and with rating agencies I am familiar with securitizations, and assume that in this case the plaintiff mortgage was "pooled" with other mortgages and securitized or held by an investor in a pool. With these agreements, it is important to note that the servicer is not frequently the party which holds the mortgages.

2. Do you have knowledge of 'dual tracking?' 3. What is your experience with and understanding of pooling and service agreements?

Location: New Jersey BA, Semiotics - Writing, Brown University Master of International Affairs, Finance, Columbia University Former A******** T******** N******* W********** B*** U** Former A******** V* - I************ F******** I*********** G**** S******* & P****** Former S***** V*** P******** R****** A******* & C***** R***** Former S***** V* - C****** o* I********* B****** C***** R****** A******* L***** a** H*** K*** L***** B******* Former D*********** - R****** A******* & C***** R***** B******* C************* B******* Current I********** C*********

Northeast

Delaware

This financial expert earned his BA from Brown University, and his Master of International Affairs in Finance from Columbia University. He has held top leadership positions at numerous financial institutions including Standard & Poor's and Lehman Brothers He is the former Senior VP and Co-Head of Investment Banking Credit, Ratings Advisory, & Execution at Lehman Brothers. Through 2013, this expert was the Director/Senior Vice President - Ratings Advisory & Credit Review for Barclays/Lehman Brothers. He is currently an independent financial consultant.

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Foreclosure Expert Witness Case Studies

Conflict of Interest Implicated When Attorney Enters Into Business Transaction With Client

Real Estate Expert Witness Opines on Lender’s Failure to Follow Foreclosure Sale Law During Eviction Proceedings

Real estate expert witness advises on bankruptcy protection for property owner

Mortgage Company Fails to Comply with Property Preservation Standards

Homeowner Disputes Foreclosure, Cites Institutional Incompetence

Bank Sued over Government Loan Service

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