Attorneys Seek Increase in Fees.

Tustin, CA -- Attorneys who specialize in providing foreclosure work for the mortgage industry are lobbying the Department of Veterans Affairs to raise its proposed reimbursement schedule, but the head of an association of attorneys says the problem runs much deeper than just the VA.

Brian Spero, a Rhode Island-based attorney who is also president of the USFN, told Mortgage Servicing News that the landscape for foreclosure-related legal work is much different than it was 10 years ago. And the changes that have occurred in recent years have increased costs associated with processing foreclosures.

"It is a problem across the board," Mr. Spero said. "There are firms that are starting to turn away business because of the fee structure involved."

One of the big changes involves the Fair Debt Collection Practices Act, he said. In the past, it was widely assumed that attorneys were exempt from its regulations governing collection practices, but recent litigation and court decisions have changed that.

Law firms have added staff, changed procedures and introduced new notifications to comply with the FDCPA, but compliance remains complicated and unclear in some respects, leaving the firms vulnerable to lawsuits.

Many "highly technical" FDCPA lawsuits have been filed against foreclosure attorneys in recent years, Mr. Spero said. In addition, the litigation has resulted in "huge increases" in the cost of liability insurance for law firms that conduct foreclosure work.

In addition to those FDCPA compliance issues, attorneys are under pressure to complete foreclosures quickly under timeframe requirements established by the secondary market agencies. In addition, many clients now use scorecards to track the progress attorneys are making in foreclosure cases.