Posted on Friday, December 3, 2010
Foreclosure defense attorney Peter Ticktin has told the Florida Bar that he has not done anything wrong by signing agreements that give him the right to take on mortgages on his client’s houses if he wins their foreclosure cases.
The Bar launched an investigation of Ticktin after the New York Times reported earlier this month that his firm, the Ticktin Law Group, was obtaining second mortgages as payment from
homeowners fighting foreclosure lawsuits.
Ticktin said the Bar mailed him a copy of the article asking him to "explain" the matter.
Last week, Ticktin sent a letter to the Bar drafted by his attorney, Kevin Tynan, claiming the method he uses to receive payment to defend clients from foreclosure is a "simple contingency fee."
"If he wins and defeats the efficacy of a mortgage, he is entitled to a share of that win," said the letter addressed to Florida Bar counsel Theodore P. Littlewood.
Francine Walker, a spokeswoman at the Florida Bar, said in an email the mortgages potentially violate a rule regulating The Florida Bar that states: "A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client."
The rule provides an exception stating lawyers may "acquire a lien granted by law to secure the lawyer’s fee or expenses; and contract with a client for a reasonable contingent fee."
Walker added a charging lien cannot be imposed against homestead property.
"There were no specific allegations in the letter" he received from the bar, said Ticktin, who called the issue a "query" rather than an investigation. "They don’t really know what they are looking for. They just wanted an explanation," Ticktin said.
According to the letter by Tynan, the only issue "that may be of concern" to the Bar is whether Ticktin’s retention agreement "to acquire a proprietary interest in the cause of action," violates the rules of professional conduct. According to Tynan, it does not.
"An owner with property worth $100,000 with a $70,000 mortgage to the bank truly owns only $30,000 of equity in that property," the letter read.
"If Mr. Ticktin is successful in defeating the mortgage, he is recovering the $70,000 of equity. If he accepts a mortgage of $28,000 … that is basically his share of the equity of that property, which he acquired."
Ticktin, whose firm represents about 3,000 homeowners fighting foreclosures, charges owners a one-time fee of $430 to take on a case, plus $330 per month while the case is pending, according to the firm’s retention agreement.
In addition, the homeowner signs an agreement that gives the Ticktin firm 40 percent of the recovered equity in the house.
If the firm is not able to reduce or wipe out the homeowner’s mortgage, the firm is not entitled to the fee, according to the agreement.
"When you say we are doing second mortgages, to me that infers that we are taking a mortgage at the time we are getting signed up," Ticktin said. "And that’s not the case."
Taking on mortgages to cover contingency fees is a fairly common practice, Ticktin said.
"This practice is widespread in many areas of law, including family law where lawyers frequently secure their fees by placing mortgages on their clients properties," Ticktin’s letter to the Bar said.
Miami attorney Brian Tannebaum, who represents lawyers in Bar grievances, said the rule is "murky," and leaves room for interpretation. He said as long as Ticktin is providing full disclosure to clients the practice doesn’t seem inappropriate.
"I’m not sure there is anything wrong with that," Tannebaum said.
"I think the Bar is looking into this
because it’s something they have not dealt with before. But it’s just like any other type of contingency fee- the only difference is we are dealing with someone’s home."
Tannebaum also points out that for many homeowners, contingency fees may be the only way they can have access to a lawyer.
"What is the client supposed to do if a client can’t afford to hire a lawyer?" he asked. "The money has got to come from somewhere — clients take out mortgages to pay legal fees all the time."
Ticktin has been suspended by the Florida Bar twice since 2009 — for 91 days and for 15 days.
Ticktin also has been fighting Deutche Bank on a foreclosure lawsuit against his house since 2007.
"We are not the bad guys," he said. "I don’t understand why everything about my life all of a sudden is news. … We are not politicians or musicians or actors or the kind of people that are generally public figures. We are doing our jobs and we are doing well."
Polyana da Costa