With the current credit and housing situations, many lawyers are reporting increased power of sale enforcement actions. Usually when this occurs, lawyers must go back to their files which can be two, three or four years old. Sometimes even more. Lenders will sometimes want additional documentation in addition to the items provided on closing. Obviously, this involves time and work by lawyers for which they will likely not be paid.

A similar problem has fallen upon many independent ISPs in the United States, where the RIAA has asked these providers to remove users. Jerry Scroggin, an owner of a small ISP, has decided to stand up to the RIAA by demanding payment for his time and loss in revenue for removing users accusing of copyright infringement. Further, he asks for proof that the user is in fact in breach of copyright laws.

I applaud Mr. Scroggin for his stance against the RIAA. The RIAA typically provides no proof or evidence that a violation has occurred and simply demands compliance with the smaller ISPs. It also expects that the smaller ISPs will comply for free. It's view seems to be that it's rights and beliefs trump those of everybody else, which clearly is not correct.

Lawyers might want to consider Mr. Scroggin's lead in demanding that lenders pay for further work done after closing. Many sub-prime lenders in Ontario do have very hefty reporting requirements on closing (often producing the same document immediately before closing and then following closing), which is fine as lawyers can charge their clients accordingly to such work. It's just that several years after closing, it takes more time to recall the file and the borrower may no longer be around. The main downside to this approach is that the lenders may "blacklist" the lawyer and refuse to use his or her services in future. Even though the lender is wrong, they will never admit it and blame everybody else.

It's worth noting that in many cases, the lenders may engage external law firms to conduct mortgage enforcement, and many firms will offer to pay reasonable expenses relating to producing documentation to them.

 

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