Want to sue your lender for some sort of foreclosure- or mortgage-related fraud? Join the club – literally. A Florida lawyer who is targeting lenders on behalf of struggling homeowners will be happy to file several “innovative legal actions” on your behalf, but it costs $5,000 to join the lawsuit and the odds of winning a quick settlement are “a long shot”. Many legal regulators are warning that this type of legal action – particularly if plaintiffs are solicited via cold calling, unapproved mail pieces and commissioned workers – are “just the latest twist on mortgage relief schemes” and could violate Florida bar rules.
The strategy is fairly simple: if your lender will not cooperate with you on a loan modification, file a “mass joinder” lawsuit along with thousands of others in an effort to make the banks comply by threat of volume. So far, while it works in theory, none of the lawsuits that have been filed have gone to trial or been settled.
On one hand, it seems reasonable that, as the lawyers put it, “the legal system is available but not free.” However, it is illegal in many states for individuals or law firms to charge up-front fees to homeowners seeking mortgage-related assistance. Should these “mass joinder” cases be an exception to this rule, or is this just another scam?
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