Waging the fight for homeowners

The attorneys in the modest office on Fayette Street are continually busy, never mind that clients find them only by word-of-mouth. They've got a service that few offer but many want: legal help for homeowners in foreclosure.

Baltimore-based Civil Justice, a nonprofit with three attorneys and a handful of law clerks, is one of the rare places - charity or private practice - where Maryland residents can turn if they're facing the loss of their homes and think that all the rules weren't followed. In a world where you can find a lawyer for anything, and teeming masses of them for personal injury suits, foreclosure law is largely a specialty for firms hired by lenders.


A foreclosure case for the borrower, after all, can look like a recipe for unbillable hours with dim hope of success. Little money from the cash-strapped clients. Little time allowed by the state's foreclosure law to prepare a case before auction. Little chance of winning.

Civil Justice is trying to change that. It's suggesting changes in state law. It's advising private-practice attorneys who want to help homeowners. And it's litigating wrongful-foreclosure cases it thinks could in one fell swoop save homeowners' investments, pave the way for lawsuits and show attorneys how foreclosure cases can be won - profitably.


"We're trying to see what works and what doesn't," said attorney Phillip R. Robinson, executive director of the group, which is directly involved in about 50 cases. It gets 20 to 30 new calls a week from homeowners in trouble.

Attorneys aren't the only word on foreclosure help. Every day, housing counselors across the state talk to lenders on behalf of borrowers. But sometimes, legal muscle is the last hope.

That's what it took for Hampden resident Daphne Fisher. After more than a year of fighting the foreclosure of the cozy home she bought in 1997 and rehabbed herself, she learned last month that her house is hers again, thanks to negotiations between Robinson and her lender. She lost in Circuit Court last summer and had been waiting for an appeal date.

"Oh, God, do I feel relieved," said Fisher, 60, a financial planner who fell behind on her payments after illness prevented her from working. "Civil Justice has really brought balance - more balance - to the process."

For Fisher, who sold a rental house in order to cover what started as several thousand dollars in late payments, the key problem wasn't money. She said she tried to reimburse the lender before it foreclosed but was told to wait for some paperwork. When she called back to say she hadn't received it, she learned that her home had been auctioned despite a promise to hold off, she said.

Robinson said the lender didn't deny it. Robinson negotiated a deal to allow her to pay off her debt and reinstate her loan, a move made possible because the investor who bought Fisher's home at auction agreed to step aside.

Fisher is the sort of client Civil Justice says it takes: Someone with a legitimate defense or the ability to make good on the mortgage payments - or both.

"Our experience is, about 10 to 20 percent of the time, that's the case," Robinson said. "But they need advocates to get to the right people."


The 10-year-old nonprofit got its start suing perpetrators of mortgage fraud who turned Baltimore into ground zero for flipping scams in the late '90s and early part of this decade. But foreclosure is the bigger problem now.

Civil Justice is also battling "foreclosure rescue" fraud - con artists bilking residents under the guise of saving them from default. Some have tricked their victims into signing over their homes.

The group pays for its attorneys through grants, fees awarded by courts and the occasional class action judgment. It asks clients to help with expenses, such as the cost to take depositions, but it tries to avoid charging them for legal services. The caseload is limited because Robinson is the only full-time employee - he's trying to get more grants to change that.

Peter Holland, an attorney in private practice who litigates rescue-scam cases, can't think of more than 10 attorneys who regularly handle foreclosure-related problems for residents. Many team up with Civil Justice, and none are short of work. The nonprofit Maryland Legal Aid, which takes foreclosure cases involving low-income homeowners in the state, says it's getting far more requests for help than it can handle.

"There's just not enough lawyers to go around for the ... tidal wave of foreclosures," said Holland, of the Holland Law Firm in Annapolis, who's working with Civil Justice on a case in Prince George's County. "You're overwhelmed, and it's often an uphill battle."

It seemed that way for Fisher. Sitting in Robinson's office last fall, she asked about her chances of success. Less than 50-50, he replied, even though he thought she had a clear case.


"The deck is just stacked against homeowners," he said.

Now, having overcome the odds, Fisher is elated and grateful. But her success is not without cost: about $90,000, by her calculation. Civil Justice charged her nothing for the legal help, but everything else added up. Fees tacked on as part of the foreclosure process. The bill from the private attorney who handled her first court case. The price tag to sell the rental she'd intended on keeping.

"That's a lot of money for a $3,000 debt - I could have paid my house off with what I've had to pay," she said. "At least I've got my house."

It's an open question as to how many of the state's rising number of foreclosure cases could be averted if everyone had an advocate. Housing counselors say that homeowners trying to work something out with their lenders often have trouble getting the right person on the phone, and Gov. Martin O'Malley last week accused mortgage servicers of subjecting people to busy signals and long waits on hold. Lenders, for their part, say they reach out to delinquent borrowers but are frequently ignored until it's too late.

A study released by the Mortgage Bankers Association in January suggests that loan servicers who began foreclosure proceedings for 6,300 Maryland homes last summer also struck deals with 5,800 local borrowers for repayment plans and loan modifications to avoid foreclosure.

"Most people don't realize that lenders lose a tremendous amount of money when they have to foreclose," said John Mechem, a spokesman for the mortgage bankers. "Our companies estimate they lose half the cost of the loan ... so that provides them an awful lot of incentive to work with borrowers to avoid foreclosure whenever possible."


More than 50,000 Maryland homeowners were late on their payments in September, up 40 percent from a year earlier, according to the most recent Mortgage Bankers Association survey. That number is expected to continue rising because thousands of adjustable-rate mortgages will reset to higher payments for the first time this year.

Anticipating a flood of new pleas for help, Civil Justice wants to get more attorneys trained to take cases. It's organizing classes across the state. That's the way Civil Justice can make a bigger impact, Robinson says, because it can never handle the cases of all the desperate homeowners who come calling.

"We're pretty maxed out," he said.


Local nonprofit groups with an attorney or attorneys on staff to help homeowners with foreclosure problems include:


Civil Justice: 410-706-0174

Maryland ACORN: 410-735-3360

Maryland Legal Aid: 410-951-7777

St. Ambrose Housing Aid Center: 410-366-8550