The Florida Bar’s Ethics Hotline recently has received numerous calls from lawyers who have been contacted by non-lawyers seeking to set up an arrangement in which the lawyers are involved in loan modifications, short sales, and other foreclosure-related rescue services on behalf of distressed homeowners.
These non-lawyers include mortgage brokers, financial management advisors, foreclosure “consultants” and others who engage in foreclosure related rescue services or other similar services. Non-lawyers have proposed a variety of agreements, even offering to hire lawyers as “in-house counsel” to provide services to the non-lawyer’s customers.
The Foreclosure Rescue Act, Section 501.1377, Florida Statutes, went into effect October 1, 2008 and imposed restrictions on non-lawyer loan modifiers to protect distressed homeowners. The new statute appears to be the impetus for these inquiries.
Lawyers should be wary of these proposals, as many violate the ethics rules and may subject the lawyer to discipline. Florida Bar members:
- Cannot pay a referral fee or give anything of value to a non-lawyer for referring distressed homeowners to the lawyer. [Rule 4-7.2(c)(14)]
- Cannot be paid by a non-lawyer to provide services to distressed homeowners. [Rule 4-5.4(a)]
- Cannot directly or indirectly divide fees with a non-lawyer. [Rule 4-5.5(a)]
- Cannot assist in the unauthorized practice of law by:
providing legal services for a distressed homeowner while employed as in-house counsel for a non-lawyer company; forming a company with a non-lawyer to perform foreclosure related services if any of the services are the practice of law; or assisting a non-lawyer individual or company in providing services that the individual or company is not authorized to provide or are otherwise illegal.[Rule 4-5.5(a)] - Cannot assist a non-lawyer in violating the provisions of the Foreclosure Rescue Act, Section 501.1377, Florida Statutes. [Rule 4-8.4(d)]
- Cannot directly contact distressed homeowners to offer representation (including by telephone or facsimile) and cannot allow someone else to directly contact distressed homeowners on the lawyer’s behalf. [Rules 4-7.4(a) and 4-8.4(a)]
- Cannot accept referrals from non-lawyers acting in the guise of a “lawyer referral service” (legitimate lawyer referral services must comply with a rule which requires all advertisements and contact with prospective clients to be in compliance with the attorney advertising rules, in addition to other requirements) [Rule 4-7.10]
- Must have a direct relationship with distressed homeowners who hire the lawyer for representation. [Rules 4-1.1, 4-1.2 and 4-1.4]
- Cannot allow a non-lawyer to choose a lawyer for a distressed homeowner or direct a lawyer’s representation of a distressed homeowner. [Rules 4-1.1, 4-1.2, 4-1.4, and 4-5.5(a)]
- Several ethics opinions, Opinions 92-3 and 95-1 in particular, discuss similar proposals and the ethics problems that arise when lawyers enter business arrangements with non-attorneys. These opinions can be accessed on the Florida Bar’s website by selecting “ethics opinions” then “list of Florida Ethics Opinions by number.”
- This alert does not address every potential problem or concern. Lawyers should not assume that conduct is permissible merely because it is not listed above. If you are a Florida Bar member with specific questions about your own conduct related to this type of situation, you should contact The Florida Bar Ethics Hotline at (800) 235-8619.
This alert also does not address the issue of what conduct by non-lawyers is permissible. Questions regarding whether conduct of non-lawyers constitutes the unlicensed practice of law should be directed to The Florida Bar Unlicensed Practice of Law Department at (850) 561-5840.
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I called a company called FHA ALL DAY, they are located in Florida, they told me they work with a lawyer in NY City. How do you know if these places are legitimate. I believe the lawyer is Barry Hall. I did look up FHA All Day on the Better Business Bur. and there were not any bad reports….but they are asking for 2500.00 up front. My brother did business with this company and is now panicing that he was robbed. Can you tell me anything about this.
Just a note: I took sometime and reviewed their website @ http://www.fhaallday.com and I noticed that they did not have any real information about who they are and where they are located, in my opinion there is a problem when a company does not put their physical address on their website. Who are they hiding from ????????
Hi,Im wondering if anyone has done business with federal home loan solutions located in jupiter FL.Are they ledgitamate? There not on the bbb.They want $2000. to modify my loan.Thanks
I recently purchased a forclosed home in broward county, Florida.Turned out that the title agent (strangely) used the wrong tax year amount in the closing statement and the amount was considerably lower than the actual tax amount.
I bought the house in late August of 2008 and in Florida taxes are payed at the end of the year. There was no way for the agent not to know what the actual taxes would be, because the Tax Appraisal Office publishes the assessment of properties at the beginning of the year.
Needless to say when the tax bill went to the lender at the beginning of the year, they payed the total taxes for 2008 and escrowed that shortage to my mortgage. In addition, the further escrowed for the 2009 taxes.
I was more than shocked when I got a my mortgage statement from the bank showing an increase in my payment from $1283 a month to $1927 per month. I contacted Countrywide, my lender for some explanation about the sudden and to say the least drastic change in my payments.
You see, Countrywide never provided me with any information that explained the substantial increase in payments. It was after my own frustrating efforts that I was able to discover the nature of the problem. After numerous discussions and negotiating with them, they agreed to spread out the 2008 tax shortage over a five year period which lowered the payments by $300.
So essentially, I am paying $58 a month on taxes that should have been paid by the seller. Despite the reduction of my payments based on the spreading out of the 2008 escrow,this was still not enough to bring the payments to a more manageable amount as it was. I am still currently paying $1600 plus which represents a full pay check for me or 50% of my take home income each month.
In an effort to avoid further crises and possible default, I have been making every reasonable effort without much success, to negotiate with Countrywide to have my payments reduced either through a refinance or a loan modification. There is much more to this story that time would not allow me to express. However the point of me sharing this experience, is to confirm that not very much has changed with regards to the behavior of lending institutions.
As a matter of information, I have never been late and so this is not an issue. It’s about their bottom line and lack of desire to serve the consumers effectively despite what help they get from the Federal Government.
this company is a scam!!! i almost paid them to modify my loan but they just didnt add up after some research and checking aroud. I called there so called lawyer barry hall and had him call me at my house and he called me from a florida number when he was suppose to be in new york!!! these guys are crooks dont give them a dime!.
I am look at a company to do business with It is called Loan Assistance Of america atty at law and are located in Jupiter,Fl.. Can you tell me if they are legit before I proceed. They say they have an atty who owns the company. his name is Mr. Portner.
Be very wary about companies that claim to have attorneys that work with them. If you do not meet the attorney, or at least directly talk, you are not dealing with an attorney. The best solution is to find a local attorney and visit the office.
Brian..
does that really constitute a scam? It’s a shame that people are so quick to dismiss everything without the proper research..
believe it or not, there ARE real companies out there getting real results for clients in distress.. absolutely there are scams, but understand that for every scam there IS a legitimate process in which the scammers are mimmicking.
good day (sry for grammer
)
Jose and others,
You should not pay a fee up-front for services from any company in reference to assitance with a loan modification.
A lawyer may ask for an upfront REFUNDABLE “retainer” (and is allowed to do so, so long as it is NOT non-refundable in a case of distressed homeowner) which is not earned by them and should sit in an escrow account (still belonging to you, but held in trust by the attorney) until the attorney has completed the services for which they contracted with you. This retainer is security for the attorney that the money is there once he/she has completed work and earned the fees, but as with any refundalbe retainer or money in escrow, the money still belongs to you until the attorney completes the work and earned the fees. If they do not earn the fees by completing the work, the money should be returned to you.
To research whether or not any attorney is practicing in the state of Florida and in good standing with the Florida Bar (the attorney regulating organization) visit their website at http://www.flabar.org and Search for Attorney. This will show you if your attorney is actively licensed to practice in the state of Florida.
Additionally, to see who owns a company in Florida, you can visit http://www.sunbiz.org and search for company name, and this will show you the owners, officers, registered agent for the company and when the company was formed, along with other information.
It is all public information and free, so use it to feel comfortable about decisions you are making. It is always good practice to “shop around” and visit a few attorneys and ask questions. Many attorneys provide a free initial consultation to hear your case and give you some information about what options you have available.
Good luck to you!
Regards,
Anthony E. Ortego, Esq.
We talked with this FHA all day back in February of ‘09. We sent them a check for $2,500.00. They were always good about calling me back when I had questions about how the process of my home modification was coming along. They asked for ‘07 and ‘08 tax returns along with recent paycheck stubs and we were stupid enough to fax those documents to them. The last time I talked to anyone was about three weeks ago. She said our information was just sent to our lender two days earlier. Now it seems they have dropped off the radar.I’m 60 years old and I have never been so completely blindsided in my whole life. I also asked this last person I talked to if I could have my money back because the process was taking so long and she said we don’t have your money.
END OF STORY!!! SO LONG $2,500.00!!!
DON’T GET CAUGHT UP IN THIS SCAM!!!!
Has anybod dealth with National foreclosure Counseling Services, that has had a positive outcome,
I live north of Florida and received their “promising letter” and gave them a call.
It’s been several months, and I have no answers.
Any comments?