Some Attorneys Say Fees Have Not Kept Pace with Rising Costs.(Brief Article)

With delinquency rates creeping upward, business is poised to pick up for attorneys who help lenders resolve loan defaults.

But some attorneys in the industry say that's a mixed blessing. The fees attorneys can charge lenders are influenced heavily by the amounts that Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs will reimburse lenders for specific tasks. Attorneys say that though technically they could charge servicers more, the marketplace only allows them to charge up to the allowable limit set by the government-sponsored enterprises and other entities.

"The servicers are not going to accept a fee that is more than the reimbursable expense, because they don't want to eat that fee," said Dave Nielson, executive director of the United States Foreclosure Network. The USFN is an association of mortgage banking attorneys.

Meanwhile, the attorneys say they their costs have risen because of technology investments and rising overhead. Because servicers are not using a standard system to communicate with vendors, an attorney may need to be involved in several networks or systems used by different clients.

Against this backdrop, say several attorneys that did not want their names used in this article, are fee levels that have not always kept pace with inflation. They say the investors have left fees at unrealistically low levels for some states, especially where a judicial foreclosure process is required. One attorney said ...