Lawyers can't help struggling homeowners

It's the unintended consequence of a California law that restricts the way attorneys working on loan modifications can be paid. Basically, they can't receive any money until the work is complete - an effort to prevent swindlers from demanding hefty fees up front and then disappearing. But it's also prompting legitimate attorneys to turn down homeowners (it can take months, even years, for loan modifications to be resolved). From the NYT:

The revelations three months ago that large banks were sloppy and negligent in preparing foreclosure documents underscore just how important it is for distressed homeowners to have representation, lawyers and consumer advocates say. Homeowners whose cases were handled improperly have little way of knowing it. Even if they found out, they would be hard-pressed to challenge a lender without a lawyer. "Consumers just don't know what is going on," said Walter Hackett, a former banker who is now a lawyer for a nonprofit service in Riverside. "They get a piece of paper saying they are going to lose their homes and they freak out."

The problem for lawyers is that even a simple modification, in which the loan is restructured so the borrower can afford the monthly payments, is a marathon, putting off their payday for months if not years. If the bank refuses to come to terms, the client may file for bankruptcy. Then the lawyer will never be paid. Alice M. Graham, a lawyer in Marina del Rey, said a homeowner in default recently tried to hire her. When Ms. Graham declined, the despairing owner begged her in vain to accept payments under the table.