Mortgage crisis profits law firms

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The nation's mortgage crisis is one of the best things that ever happened to law firms. Many of them are lawyering up as the flood of foreclosures rises to record levels.

"Attorneys who work in this specialized area of legal representation are very busy, as one might expect," said Alberta E. Hultman, executive director of the U.S. Foreclosure Network, a Tustin, Calif., association of foreclosure lawyers and trustee companies.

RDManley Inc., a Palos Heights, Ill., consulting company that helps lawyers set up law practices, said one of its firms started handling foreclosure cases in May 2006. Its business is thriving now.

"They spend approximately $10,000 weekly in advertising to generate 45 new cases, or $157,000 gross weekly," RDManley says on its Web site, www.foreclosurelawinfo.com.

Homeowners at risk of losing their homes often wind up spending between $2,000 and $3,900 in attorneys' fees to file bankruptcy petitions to halt foreclosure.

"Generally, it stops everything for approximately 30 to 60 days," said Al Wilson, a Washington lawyer who specializes in consumer law.

A court then considers a homeowner's financial condition before deciding whether a lender can foreclose on the property.

Many of the homeowners who have run into trouble bought homes with adjustable-rate mortgages featuring low introductory interest rates that reset to much higher rates they can't afford to pay.

From the time homeowners are notified they are in default on their mortgage, they have about four months in most states to avoid having their homes sold at auction, according to RealtyTrac, an Irvine, Calif., foreclosure data firm. Homes can legally be auctioned after default in as little as 45 days in Maryland and Virginia and 47 days in the District.

Last year, 2.2 million foreclosure actions were filed in the nation's courts against property owners — a 75 percent increase over 2006, RealtyTrac reported.