Florida Bar

Florida Bar Continues Crackdown On Attorney/Mod Company Partnerships

By Diane C. Lade, South Florida Sun Sentinel

 A Coral Springs lawyer is being investigated by the Florida Bar Association for her involvement with a South Florida foreclosure rescue company, as trade regulators continue to file actions against attorneys involved in similar operations.

Bar officials confirmed they are investigating Karen Grun and her ties to Housing Assistance Law Center, of Deerfield Beach. The Florida Attorney General’s Office filed legal action against the company and three afilliates in July, claiming they illegally took payments in advance and, in some cases, guaranteed a mortgage could be modified in 30 to 60 days.

The bar has increasingly scrutinized partnerships between lawyers and foreclosure rescue firms, concerned the relationships were forged to skirt state laws barring upfront fees for loan modification work. The professional association, which monitors and disciplines lawyers, opened 195 cases regarding foreclosure rescue practices this year

“They’ve really put a lot of heat on attorneys who were doing this,” said Susan Spurgeon, a Tampa real estate lawyer who has lectured on mortgage modification.

Grun did not return phone messages the Sun Sentinel left at her home and office.

Aventura real estate lawyer Daniel Henry Fox was disbarred, following an investigation, in October after he allegedly? abandonned some of his residential loan modification clients. His office phone has been disconnected and an e-mail from the Sun Sentinel was not returned.

Grun’s name and the phrase “a private law firm” were on Housing Assistance Law Center documents, and state corporate records listed her as the center’s director/president from April through June. Housing Assistance since has been dissolved and it’s telephone number has been disconnected. (Read more)

Florida Bar

FL AG & Bar Cracking Down On Mod Lawyers

When Maryann Salvas sent $1,795 to Aventura attorney Daniel Fox to arrange a modification of her mortgage and reduce her monthly payments, she didn’t hesitate because she thought “people were supposed to trust lawyers.”

Almost a year passed without the loan on her Rhode Island house being modified, said Salvas who hired Fox based on a phone solicitation. In order to pay Fox’s fee, Salvas said she missed a mortgage payment, never caught up on the late payment, and is now four months behind on the mortgage.

Read the rest of the story here:

http://www.dailybusinessreview.com/news.html?news_id=57694

Florida Bar

FL AG & FL Bar Give $84k Legal Aid Society of Orange County To Open Foreclosure Clinic

TALLAHASSEE, FL – Attorney General Bill McCollum and The Florida Bar Foundation today awarded $84,000 to the Legal Aid Society of the Orange County Bar Association, Inc. to be used for a new foreclosure defense assistance program. The program is funded by money obtained by the Attorney General through a settlement with Countrywide Financial. A total of $4 million will be available over two years to fund additional lawyer and paralegal positions devoted to providing free assistance to homeowners facing foreclosures who cannot afford legal defense.
 
“With these funds, we can provide direct legal assistance to Central Florida homeowners trying to save their homes,” said Attorney General McCollum.

The Florida Bar Foundation received $2 million from the Attorney General’s Office to distribute in the form of annual grants. The grants will vary in amount depending on the number of foreclosures in a particular area. A total of $2 million is available for distribution this year, and another $2 million will be available next year.

“With this critical funding from the great work of Attorney General McCollum and his staff, the Orange County Bar Association’s Legal Aid Society will be able to fund a Foreclosure Clinic staffed by an experienced housing attorney to provide free legal advice to Central Floridians facing foreclosure,” said Heather Rodriguez, President of the Legal Aid Society. “We are truly thankful for the hard work and aggressive advocacy of Attorney General McCollum and his commitment to use the funds received from this settlement to improve the lives of all Floridians.”

According to the Legal Aid Society, there were 11,315 new foreclosure cases filed in Orange County in 2007. In 2008, the number of new foreclosure cases more than doubled to 26,131, and experts project there will be 40,000 new foreclosure cases filed in Orange County alone in 2009.

Orange County residents who need legal assistance to avoid foreclosure may contact the Orange County Bar Association’s Legal Aid Society at 407-841-8310 or visit the website at http://www.legalaidocba.org. Assistance is also available in several languages, including Spanish and Creole.

More awards for the foreclosure defense program will be announced later this week throughout the state.

Florida Bar

CT & FL AG Targets 2 Mod Companies Claiming Partnership With Law Firms

Diane Lade of the  South Florida Sun-Sentinel wrote an article about how the Connecticut and Florida AG’s offices are investigating First Legal/Nationwide Home Relief.  The Florida AG is investigating both First Legal/Nationwide Home Relief and Housing Assistance Law Center. 

http://www.sun-sentinel.com/business/custom/consumer/sfl-sfl-foreclosure-law-082309sbaug23,0,6462732.story?page=1

The Florida Bar posted an advisory back in March advising attorneys what they can and cannot do when doing business with modification companies:

ETHICS ALERT:

PROVIDING LEGAL SERVICES TO DISTRESSED HOMEOWNERS

 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) 561-584