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Business dries up for once-hot foreclosure defense industry

Attorney Mark Stopa said his foreclosure defense business is “remaining steady.”
Attorney Mark Stopa said his foreclosure defense business is “remaining steady.”
Published Dec. 29, 2015

In the years after the housing crash, foreclosure defense ballooned into one of most active areas of law.

Legions of lawyers in the Tampa Bay region and other parts of Florida found a lucrative new business helping borrowers battle the banks and stave off foreclosure. "Save your Home'' became the rallying cry of ubiquitous TV and Internet ads

But with a dramatic drop in new foreclosure filings, even some well-known foreclosure defense attorneys say the work is shrinking and forcing them to refocus their practices.

"Foreclosures are done and over — I'm trying to figure out what I'm going to be when I grow up,'' said Matthew Weid­ner, a St. Petersburg attorney who has represented scores of clients facing loss of their homes.

At the Tampa firm of Stamatakis, Thalji and Bonanno, the volume of foreclosure defense work — once 90 percent of the practice — has plunged in the past 18 months.

"I'd say the party is over, so to speak,'' said attorney Scott Stamatakis.

Hit hard by the real estate bust, Tampa Bay still has one of the nation's highest foreclosure rates. As of this fall, 3.6 percent of all bay area homes with mortgages were in some stage of foreclosure compared to the national rate of 1.2 percent, CoreLogic reported.

But between 2009, the peak of the foreclosure crisis, and the Sept. 30 end of the current fiscal year, foreclosure filings have plummeted — down 78 percent in Pinellas County and roughly that much in the rest of the bay area.

Fewer foreclosure filings means fewer borrowers seeking legal help.

Attorney Bryant Dunivan said foreclosures no longer make up his entire caseload as they did when he joined the Brandon law firm of Michael Owen in early 2013.

"I don't know I can say it's dried up but it's definitely shifted,'' Dunivan said of foreclosure defense. "It's not the mass filings, it's now more nuanced.''

Dunivan said the firm is finding new opportunities for business in violations of consumer protection and fair debt collection practices laws. Some borrowers, for example, thought they had avoided foreclosure when they settled with their bank, only to have their loan sold and the new owner illegally harassing them for payment.

Title problems are another area where Dunivan sees the chance to pick up business. In their rush to foreclose, lenders got sloppy with legal descriptions and other matters that could cloud the title on properties and prevent their resale.

"There are rampant mistakes,'' Dunivan said. "I think we're going to see a lot of title issues.''

Errors and outright fraud have led to the closure of some so-called "foreclosure mills,'' big law firms that represented lenders in thousands of cases steam-rollered through the system. Many used "robo-signers'' to swear to the validity of documents they had never seen, providing a hook for defense lawyers like Gary Baker to challenge the cases and get them dismissed.

Baker, who has offices in Clearwater and Pasco County, said his foreclosure case load has "decreased somewhat'' in the past few years.

"But I'm also a bankruptcy lawyer and actually my bankruptcy practice has been up,'' he added. "I think that for a while people were not sure where the economy was heading and that kind of delayed'' the decision to declare bankruptcy.

Stamatakis said his Tampa firm also has increased its bankruptcy work, plus explored other areas to make up for the loss of foreclosure business.

"We were big on advertising, doing television, doing radio, doing Internet, and all that was driven by foreclosure fees,'' he said. "We're a long way from that; we've moved on with our practice.''

Now, instead of expensive ads, the firm gets more bang for its buck through what Stamatakis calls "community advertising'' like donating money for Little League uniforms.

Not all foreclosure defense attorneys, however, say business has slumped.

"I get between 90 and 100 people contacting our office over foreclosure defense issues a month and that number is actually growing,'' said Michael Wasylik, a Dade City attorney. "Partly, I think, that's because (lawyers) who used to do this have gotten out. When it got really popular, a lot of lawyers who weren't really able to do anything else started doing it and I think that as their business dried up we were getting referrals from other lawyers and past clients.''

Like most foreclosure defense practices, Wasylik's firm offers clients options that include negotiating with the bank on a short sale or loan modification. For many borrowers, though, the goal is to get the case dismissed even though banks generally refile.

"I have one family that was filed on four times and beat all four cases and there's been no activity at all from the bank since the last dismissal about a year ago,'' Wasylik said. "That family had active cases starting in 2007 and we've kept them in their home that long.''

Lawyer Mark Stopa, whose offices in Tampa, St. Petersburg and Orlando have made him one of Florida's best-known foreclosure defense attorneys, said he has gotten more than 1,000 cases dismissed. Although foreclosure filings are down, his own practice is "remaining steady,'' he said, with no decrease in staff size.

"I don't think this is over by any means,'' Stopa said of foreclosures. "I think it's slowing down but the cases won't go away overnight.''

He and other lawyers on both sides of the foreclosure fence are anxiously awaiting a Florida Supreme Court ruling on whether a lender can refile a case if it has taken no action within five years of dismissal. A ruling on the statute of limitations "could impact hundreds if not thousands of cases,'' Stopa said.

For now, though, many lawyers are adapting to a world without hordes of homeowners desperate for legal help.

Asked what kind of law he's practicing these says, Matt Weidner joked: "Threshold law.''

And what kind of cases are those?

"Anything that crosses the threshold.''

Contact Susan Tayor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate

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