One way the state can help in the foreclosure crisis, lawmakers decided a few months ago, is allowing homeowners to compel their lenders to sit down with them at the negotiating table to see if a resolution short of foreclosure can be struck.

Some attorneys are now being criticized for exploiting the new law by trying to get hired by homeowners as their advocates.

Indeed, in other states that offer similar mediation programs, a niche specialty has been created by lawyers. They are launching advertising campaigns pitching themselves as homeowners advocates during face-to-face meetings with lenders.

Attorneys say it never hurts to have legal representation in the complicated process to keep homes.

But Michael Joe, an attorney and foreclosure specialist for the Legal Aid Center of Southern Nevada, says those attorneys are preying on homeowners for a service they dont need, and charging from $1,500 to $3,500 for it.

What they are doing is trolling the county recorders site to see who is getting foreclosed upon and mailing them, Joe said. It is preying upon the weak and the desperate.

He compared the practice to attorneys who wait outside a hospital for injured patients who are brought in by ambulance.

The issue springs from a law, adopted by the Legislature and which took effect July 1, that gives homeowners facing mortgage default up to 30 days from that notice to demand face-to-face sit-downs with their lenders, refereed by neutral, state-appointed mediators, to try and resolve the problem short of foreclosure. Without the law, homeowners have complained, lenders have ignored their phone calls and refused to talk about solutions.

With the new law, more than 450 homeowners have requested mediation, said Bill Gang, spokesman for the Nevada Supreme Court, which is overseeing the program. Mediations are expected to begin by early September.

Backers of the program are hoping it makes a dent in Nevadas nation-leading rate of foreclosures, whose ripples have been felt throughout the housing market.

Joe said homeowners dont need attorney representation because mediators are supposed to be knowledgeable, fair and unbiased. There are programs for homeowners to learn how to represent themselves in mediation and understand how the process works, he said.

Most of the attorneys are providing a service not worth what they are charging, Joe said. They are giving false expectations. It happens very often that what (homeowners) think they are getting does not make a difference in saving the home.

Karen Dennison, vice chairwoman of the real property section for the State Bar of Nevada, said its up to each homeowner to decide whether he needs legal representation, and it is not improper for lawyers to advertise their services.

A home is a pretty important investment and if you want the best representation possible, you want to a hire a lawyer, Dennison said.

Robert Noggle, a real estate and business attorney with Black & LoBello, said attorneys have helped people stay in their homes by working with lenders and helping negotiate short sales. In mediation, attorneys may need to advise homeowners on what is offered by lenders.

Although attorneys arent necessary, not every homeowner who goes into mediation understands the process, Noggle said.

Homeowners can represent themselves in loan modifications, but the stakes are relatively high, Noggle said.

Although Joe questions lawyers involvement as homeowner advocates, attorneys have been welcomed, along with retired judges and others, to serve as mediators. More than 400 people have signed up to help. The job pays $400 half each from homeowner and lender per mediation, which can last up to four hours.

The start of the program comes as Nevada posted a record number of home repossessions in July, according to California-based RealtyTrac.

The more than 450 people who have signed up for mediation are expected to be the tip of the iceberg.

Gang said when a similar program started in Connecticut, 40Êpercent of those who got notices of default went through mediation and 60 percent of those kept their homes.

We are hopeful for some very positive results out of this, Gang said. When any family is on the verge of losing a home, any program that gives them hope is worthwhile.

But Gang cautioned about having too many expectations of the program. Nevadas foreclosure environment is different from other states, he said, because of the number of investor-owned properties here and the steep decline in property values that make it more difficult for lenders to work out deals.

Lenders can foreclosure on homes 90 days after they file notices of default and mediations must be scheduled 80 days from the filings. Lenders cant proceed with foreclosure unless they get certifications they took part in mediations if requested.

Lenders arent required to work out agreements with homeowners, but their representatives at mediations must have the authority to make modifications to loans, Gang said.

I think it will help because it brings the lenders and borrowers face to face, Dennison said. Borrowers have had a difficult time in meeting with lenders on their own, and I think there will be more successful loan modifications because of it.

A version of this story appears in this weeks In Business Las Vegas, a sister publication of the Sun.

Brian Wargo can bereached at 259-4011 or at wargo@lasvegassun.com.