I was late when I first met my clients, the Lipkin family, outside my office. I was very late. I couldn't believe I was late. I felt like an imposter. Maybe I was an imposter. I had dressed as professionally as I could: a sophisticated sports jacket, slicked-back gelled hair, elegant briefcase. My straightened posture exuded the charismatic confidence of a seasoned attorney. In my mind, at least. I extended a hand and introduced myself to a family that was about to have their home foreclosed upon. Carl and Natalie, the husband and wife (I've changed their names), were both in their early thirties. Their three young daughters were with them, wilting in the heat of the parking lot. They met me with open smiles, even though they had just driven ninety minutes from Sacramento on a scorching summer day. I invited them in. I was hoping they would never guess that despite being a licensed attorney two years out of law school, I was utterly paralyzed with fearâ€”and earnestly praying to Allah that my potential clients were not about to call me out as an incompetent charlatan, punch me in the face, storm out of the office, and call the state bar seeking to disqualify me. I was the guy who was going to save these people from being evicted from their own home? Who was I kidding? In reality, "my law office" was actually my friend's office, which he'd lent to me so that I could meet these clients. The classy jacket had been purchased at a clearance sale in an outlet store at the Great Mall in Milpitas. The gel was the last remnant of a decaying and potentially expired bottle I'd probably had since college but never found the opportunity to use. The suitcase was a gift from my relatives in Pakistanâ€”who, much like the rest of my family, were thoroughly shocked that I had passed the bar exam and become a licensed attorney. My business cards had been printed for free by Vistaprint, and despite having a professional front side featuring my name in bold letters and the words ATTORNEY AT LAW, the back side glared BUSINESS CARDS ARE FREE AT WWW.VISTAPRINT.COM!
Game over. I was doomed. ----
It wasn't supposed to be this way. In 2007 I graduated from UC Davis School of Law, a reputable institution that ranks in the top forty of the inexplicably influential U.S. News &World Report annual school ranking. According to my Property professor, students who graduate from top-forty law schools are bred to "find a comfortable desk job, most likely in a corporation, and make a nice income without really having to get their hands dirty." The old saying goes that the A students become the professors, the B students find jobs in government or corporate law, and the C students end up making all the money. But given the economy, this conventional wisdom was out the window. Instead of being employed at all, like thousands of others who were unlucky enough to graduate law school in 2007, I ended up in my old bedroom, sharing the family home with my parents and my grandmother. Despite being thoroughly emasculating for a twenty-eight-year-old, living at home certainly has its benefits. You never have to cook, given that your mother, a culinary Jedi Knight, makes fresh Pakistani food every night. You avoid doing the laundry and the dishes, because your father has a "specific system" that only he has mastered. Also, you have your own personal "prayer factory" in the form of a very pious grandmother, who constantly sends duaas and
blessings your way—and reminds you nonstop that the only reason she's still living is to see you married and with kids. And for a solo attorney without any money, home can also serve as a convenient and rent-free law office. After passing the bar, I immediately started scouring the internet for any job even tangentially related to law. I applied for legal-secretary positions, legal-assistant jobs designed for nineteenyear-old college students, unpaid internships at shady start-ups, even senior legal-counsel positions at corporations requiring a minimum of ten years' experience. I shamelessly claimed, as one of my qualifications, "worldly wisdom that compensates for lack of actual legal experience." I was denied by every recruiting center. Dejected, I lapsed into my innate South Asian melodrama. I made the following declarations: "My life is shameful. I'm a grownass man, thoroughly qualified, who just got denied a menial job at a small law firm. If I was a samurai in feudal Japan, I would have to harakiri myself out of dishonor and shame." "Well, you're no samurai," replied my mother, "and you're not in feudal Japan. You're Pakistani and you're living at home. So be quiet, eat your daal and naan, and afterward go get some hara dhaniya, pyaaz, tamatar, and Lactaid milk from Food 4 Less." My mother is the world's second-bluntest instrument, preceded only by my father. Tired of being rejected, I decided to venture forth and learn the law on my own. It didn't take a genius to figure out we were heading toward a full-blown recession; a South Asian attorney, who'd cornered the niche market of "the Pakistani American attorney" years ago, told me to learn how to file Chapter 7 and Chapter 13 bankruptcies, which were the bread and butter of solo attorneys trying to survive. And so off I went to Google. I typed in "Chapter 7 and Chapter 13 bankruptcy guides" and found the trusted and respected Nolo legal guides for less than thirty dollars apiece. These guides are manna from heaven for aspiring attorneys; they ostensibly teach the layman all the fundamentals of how to "do it yourself " so you won't have to spend money on people like me, but it turns out they're just as useful to law school graduates living with their parents. I devoured every bankruptcy book I could find, and then turned to my associate legal counsel, Google, for more (free) information on bankruptcy law. Somewhere along the way I read an article predicting a rise in foreclosures due to the disastrous economy, and realized the rate of Chapter 13 bankruptcies was going to increase exponentially as people desperately tried to save their homes. I also discovered that agents and brokers who'd made hundreds of thousands in the once booming but now hemorrhaging "loan refinancing market" had magically transformed into "loan-modification consultants." So the subprime-mortgage brokers who had actively preyed on unsophisticated people by convincing them to sign "too good to be true" loans—which later defaulted, thereby capsizing the housing market—were now demanding more money from these same clients in order to modify their loans and allow them to avoid pending foreclosures. Despite being equipped with some—some—knowledge, I shared the quintessential trait of all young attorneys: unrelenting, paralyzing fear. It overwhelms everything we do and contaminates the first two to three years of our law jobs. The thought process goes something like this: "I know nothing. How the hell did I get this degree? How the hell did I pass the bar? Law school didn't teach me anything. Do my employers know I'm incompetent? How long can
I fake this before they figure it out? Are my peers like this? How come everyone else knows what they're doing? What if I never learn? What happens if I get fired or fail? Will I get disbarred? I bet I'll get disbarred! Damn, I'm getting disbarred! Please, God, don't let me get disbarred." I had all these thoughts as the Lipkin family sat on my friend's office couch and told me that they were about to lose their home. These people trusted me more than I trusted myself. God help us both. ----
THE LIPKINS: FORECLOSING THE AMERICAN DREAM Man, if you can keep me from getting foreclosed, I will personally pimp out your pretty ride over there," promised Carl, pointing out the window to a sleek BMW that did not belong to me. "My car is that broken-down 1997 Camry next to the Beemer," I admitted. "Get out! A guy like you? A fancy lawyer? You're riding in that? You probably have a sweet cherry hidden in your garage, huh?" I just nodded my head to satiate his fantasy, knowing full well the only thing in my garage was my comic-book collection from fifth grade. Carl has been infatuated with cars since childhood. He loves the way they look, the way they feel, the way they move. Miserable as a stockbroker, Carl quit eight years ago and used all his savings to invest in his first business, a luxury-car detailing service. "He's obsessed with cars," Natalie said. "He wants to make them fast and pretty." Although not technically married, Carl and Nancy refer to one another as husband and wife, having been together for nearly fifteen years—ever since Natalie was in high school. They're now raising three adorable daughters—two from Carl's previous relationship, and their own eighteen-month-old. Ironically, Natalie's previous job, before she began managing Carl's two businesses (they expanded three years ago), was as a mortgage processor for a division of Countrywide Financial, the nation's largest independent mortgage lender and a key actor in our current financial mess. "Mortgage processing was my passion," she said. "Really, my passion. When I worked for Countrywide, it wasn't anything like what we're witnessing now. I was really good at my job. My bosses loved me. I processed twenty to twenty-five loans a month. But right when the mortgage business was hitting its peak, the economy started to slow down, and then everything started falling. They let me go when I had to move." Despite Natalie losing her job, the move to Sacramento was auspicious for the family—Carl opened a second branch of his detailing shop, and they finally purchased their first home. "Before this, we were living in the Bay," Natalie said, "Carl had bought a house with his dad and sister. All of us stayed in that house. My family, his sister's family. It was a four-bedroom
home. Think about it: two families, four kids, sixteen hundred square feet? We had to buy our own place." So they did. Moved to Sacramento and into a house that, as we all now know, was far beyond their means. But it's hard to blame them; the economy was booming, and Wells Fargo—not some fly-by-night operation—was offering them incredible terms. "It felt great to get the home," Natalie said. "Our own home, our own pool. My own master bedroom. My kids finally had their own room instead of sharing it with others. I even had a spare room for once. I was happy. It was starting something new—something completely our own." Like many Americans suckered by mortgage deals, the Lipkins were given a "stated-income loan" with an "adjustable interest rate." This nifty trick allowed brokers and their agents to encourage borrowers to essentially make up any income for themselves. Carl was given a loan he would be unable to afford on his actual salary. Adjustable interest rates were initially low, thereby enticing borrowers with a promise of low monthly payments. When asked what would happen if the rate "adjusted" and the payments increased, borrowers like the Lipkins were told, "Oh, don't worry, by that time your property will have significantly appreciated. You can always refinance the loan and take money from the growing equity." "We just did what the bank said to do," explained Natalie. "Our broker said, 'Here, sign this paper and you'll get the loan.' So we did. We wouldn't have qualified otherwise." That same broker was the one who referred them to me to save their home from foreclosure. On the stated-income loan, the bank claimed Carl was making $25,000 a month. In reality, Carl was netting a salary of $26,000—a year. "But you knew it was a lie, right?" I asked. "So why do it?" "You're right," Carl admitted. "I mean, I knew I wasn't making that much, but the broker said it would be no problem, that it was what everyone was doing. And they said it was the only way the bank would approve it, so I just trusted him and signed the paper. He said everything would be okay." "I partially blame ourselves for this," Natalie added. "But then again, I also blame the economy. And I also blame the banks. Ever since we got in trouble, we've been trying to work with them! I want to keep my home. I want to stay in my home. I've tried to keep my home! I want to raise my children in my home." The courts have held that the onus is on the bank to make at least a reasonable effort to ensure their loans are not oppressive, fraudulent, or liable to default. This is why so many of these "stated-income loans" are in violation of federal and state lending laws, and courts generally find the lenders to be breaching their duty to their clients. Many times, the court rescinds the original contract in its entirety. But like most homeowners, the Lipkins didn't know the subtleties of the law. They were simply told they could sign a paper and state a mythical income to push the loan documents forward.
In other words, they relied on their broker—in this case, a member of their own Filipino community. In my neck of the woods, it was mostly Vietnamese Americans, South Asians, and Afghan Americans coordinating loans for their fellow minorities—all groups, regardless of race or religion, participated in the fraud. In return, borrowers got a home and a piece of the American dream. Until the rude awakening. "In 2008—that's when things went bad," Natalie said. "The market for cars started going down, and almost overnight we lost 50 percent of our income. At the same time, the interest rate adjusted, and we were paying nearly $4,100 a month on our loans." Their home, meanwhile, which was originally valued at $585,000, had depreciated severely in three scant years. It was now essentially worthless at $270,000. "We didn't know what to do," Natalie said. "We couldn't make the payments. The banks would call us all the time, asking 'Have you been able to make your payments? Why not? When will you make the payments?' We wanted to keep our home! We really tried to do everything. But the banks, oh my goodness, you get the runaround!" After they realized they couldn't make the payments, Carl and Natalie first tried for a loan told them to try the HOPE for Homeowners program. They applied, and were denied. The bank told the Lipkins they should have done a manual entry for the loan modification through the loss-mitigation department. "You never get the same person twice," Natalie said. "It's never the same person when you call back. Then someone calculates the numbers wrong. Someone else gets their information wrong. They're not on the ball on their side—that's what makes it so frustrating. I'll fax them something, and I won't know they didn't receive it even though I got an 'okay' from my fax. They don't even bother telling you—ever. So then they close my file, and I start all over again."