Foreclosure Mess Draws in the Lawyers Who Handled Them

From the New York Times by BARRY MEIER.

With the rash of foreclosures across the country in recent years, many lawyers have specialized in the lucrative business of handling cases for banks and loan servicers. And now that flaws are being acknowledged by big lenders in the processing of foreclosures, some of these lawyers are finding themselves in the cross hairs of investigators — and scorned by their former clients.

Consider the case of David J. Stern, a lawyer in Plantation, Fla., whose firm handled an estimated 20 percent of foreclosure-related proceedings in Florida, one of the states hit hardest by the housing crisis.

Mr. Stern is under investigation by the Florida attorney general and is a defendant in several lawsuits brought by homeowners. And in recent days, lenders and mortgage holding companies that had used Mr. Stern’s services, including Citigroup and GMAC Mortgage, said they would no longer do so. …

“This is a very profitable business model,” said O. Max Gardner III, a lawyer in Shelby, N.C., who defends homeowners in foreclosure proceedings. “You’ve got five lawyers and four hundred people without legal training working for them.”