"Let's kill all the lawyers," Shakespeare demanded over 400 years ago. These days, lawyers have taken a back seat to Wall Street as the main target of public ire. But when a bank sues a homeowner for foreclosure or engages in any other legal action related to delinquent mortgages, they hire a law firm to represent them. Nicknamed "foreclosure mills" because of the relentless churn of cases they take on, these firms are complicit in much of the misconduct we attribute to banks throughout the foreclosure process. There's a long list of documented abuse by foreclosure mills, which are often specialist law firms built to handle thousands of foreclosures at once. Because of their financial incentives, firms are rewarded for each action they take and frequently cut corners on legally mandated steps of the process. And like everyone else along the foreclosure chain, foreclosure mills have faced virtually no accountability for their misconduct. "It's the crookedest thing I've ever seen in 38 years of law practice," said Blair Drazic, a defense attorney in Grand Junction, Colorado.

But Colorado is the place where justice might finally get served, thanks to an investigation by state Attorney General John Suthers into the billing practices of leading foreclosure mills. The case, which has not yet led to charges, has so far featured allegations of bill-padding, collusion, destruction of evidence, and lobbying for personal gain. If Colorado is successful in reining in the worst conduct of the foreclosure mills, it could spark more scrutiny of their practices across the country.

In most states, one or two law firms conduct almost all legal operations tied to foreclosures. One firm carries out all the foreclosures in Michigan, for example, and another does every one in Washington state. Geoff Walsh of the National Consumer Law Center (NCLC) says this has to do with the technology particular to servicing mortgages. "There are computerized records and servicing platforms, and these law firms get tied into them," says Walsh. "For most firms, this becomes all they do." When the foreclosure crisis intensified in 2007, firms could squeeze out massive profits from kicking people out of their homes.

Having mini-monopolies means that firms can set their own standard practices, leading to multiple ethical lapses. Foreclosure mills actively participated in presenting robo-signed and false documents to state courts, in many cases mocking up the documents themselves. A Mother Jones investigation in 2010 exposed the David J. Stern Law Firm in Florida for backdating notarized documents and engaging in other falsifications. Subsequent investigations have revealed this is a routine practice at other foreclosure mills. Every time a state forces lawyers to personally attest to the validity of documents, such as in Nevada, New York, or Florida, foreclosure cases plummet.

Foreclosure mills are hired by mortgage servicers, companies that handle the day-to-day operations on mortgages but do not own the underlying loans. This is a major problem because mortgage servicers (frequently arms of big banks like Bank of America and JPMorgan Chase) want different things out of a foreclosure than the loan owners (who could be any investor, from a public pension fund to mortgage giants Fannie Mae and Freddie Mac) do. Investors in the loans frequently benefit from modifying a loan instead of foreclosing. But the mortgage servicer financially benefits from foreclosure because their compensation is structured in such a way that a modification hurts their bottom line.

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In a case like the one filed by Colorado attorney Blair Drazic, it would have made more sense for the owner of the loan to modify: The home has an appraised value of $100,000, but the client could pay up to $1,200 a month to stay, which works out to about $432,000 on a 30-year payment schedule. But the foreclosure mill, acting at the behest of the servicer, pursued foreclosure instead. "This is a property only my clients could love," Drazic says. "It's a conflict of interest. The foreclosure mill purports to represent the [investors], but they're throwing them on the street." In another Drazic case, his client has a Federal Housing Administration (FHA) loan, and FHA guidelines clearly show that the servicer must pursue a modification before pursuing foreclosure. But the foreclosure mill ignored this practice. "The law firm is interfering with my client's right to a modification," Drazic says. "There's so much money involved, it's like the three monkeys-see no evil, hear no evil, speak no evil."

In some states, the denial of modifications by foreclosure mills has become systematic. In New York, the Steven J. Baum Law Firm went out of business in 2011 over leaked pictures of a Halloween party featuring their employees dressed as homeless people. But before that, they flouted a state law requiring all foreclosure cases to go to a settlement conference where the borrower and the bank could work out a modification. Law firms have to file a "request for relief" to trigger the settlement conference. But the firm simply stopped filing the requests, creating a "shadow docket" of tens of thousands of foreclosure cases. MFY Legal Services, Inc. actually sued the law firm to speed up the foreclosure process and give their borrowers a shot at relief. Baum paid $4 million to the state for other violations before closing, but efforts to relieve the shadow docket in New York have stalled.

The investigation in Colorado involves something more akin to petty theft. Colorado is a nonjudicial foreclosure state, so foreclosure mills don't have to take homeowners to court, but they must carry out various legal actions related to foreclosure, like posting a legal notice on the door of homes in foreclosure, informing the owners of their rights. Attorney General Suthers, a Republican, requested documents from county public trustees offices in May, which showed billing statements from foreclosure mills. While the cost to a foreclosure mill of attaching the notices to the door costs at most $25, firms were charging as much as $300, a twelve-fold markup. "The scope of the investigation is very simple," said Assistant Attorney General Erik Neusch in one court proceeding. "Why [attorneys] charge more than their actual costs."

Further filings by Suthers show that Castle Law Group and Aronowitz & Mecklenberg, Colorado's two biggest foreclosure mills, bought specific process-server companies which did the actual work of posting the legal notices, and then colluded with one another to fix the price for posting notices at levels well above the actual cost ("I just wanted our offices to try and get on the same page on what we are charging for all of this," wrote Stacey Aronowitz to Caren Castle in one 2009 e-mail). The firms then lobbied the state to mandate a second notice, which increased their profits two-fold. The firms earned $20 million over the past four years just on posting notices.

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The homeowner must pay all legal fees to "cure" the default and stop foreclosure, or else they lose their homes. In one recent revelation, Colorado foreclosure mills charged homeowners thousands of dollars for nonexistent cases that they never filed. In the event of a foreclosure sale, the investors in the loan get reduced value relative to a modification, and the legal fees are thrown on top of that. This amounts to law firms "stealing from their own clients," says Drazic.

Foreclosure mills tried and failed to keep the investigation sealed from the public. Castle Law Group and Aronowitz & Mecklenberg, the state's two largest foreclosure mills, counter-sued the attorney general directly to prevent subpoenas for internal documents, arguing that they would violate attorney-client privilege. Then, in July, Susan Hendricks, a former associate at Aronowitz & Mecklenberg, came forward to allege additional misconduct at the firm, including padding fees, keeping refunds due to its clients, and destroying evidence essential to the investigation. Aronowitz & Mecklenberg sued unsuccessfully to prevent Hendricks' testimony from going public, claiming that she was a "special counsel" to the firm, and that her information would also violate attorney-client privilege.

The Colorado investigation could prove a first crack in a system of profit-gouging and unethical conduct that stretches back years. In states where banks don't have to go to court to foreclose on a homeowner, legal fees are harder to uncover, and it takes sustained oversight, like what we're seeing in Colorado, to get results. Previous investigations have led to minimal fines, and sanctions through judicial conduct reviews have been nonexistent. One foreclosure mill in Florida, Marshall C. Watson, closed down their office after a State Bar disciplinary action, only to open it again with a different name and the same clients.

Lawyers who deal with foreclosure mills are struck by the ethical lapses of the attorneys at those firms, and how they could work on such criminal financial industry activities without speaking up. Says Drazic, "I used to represent murderers, and I wouldn't represent these people."