Homeowners Bombard California State Bar With Complaints Against Attorneys Doing Loan Modifications; Calls Up To 1,000/Month, Says Official

In San Francisco, California, KCBS Radio 740 AM reports:

• As the Obama Administration kicks off a $75 billion loan modification plan, the California State Bar is reporting a high number of calls regarding lawyers who may be crossing the line when working with loan modification specialists. It's prompted the Bar to take the unusual move of issuing an "ethics alert".(1)

• California law prohibits foreclosure consultants from taking fees up front. Lawyers, on the other hand can, so often they're asked by foreclosure specialists to work with them and split the fees, but that's against the rules.

• "It's possible that lawyers have gone to law school and have gone through the ethics portion of their admissions requirements and don't realize that they're not supposed to split fees with non-lawyers. For those lawyers that don't know that, this is helpful," said Russell Weiner, who is deputy trial counsel with the State Bar.

• He says just a few months ago they started getting calls from people complaining about hiring a lawyer to help with loan modification, only to wind up losing the house. Those calls are now up to a thousand a month. He says if a lawyer does hire a so called mortgage specialist, or non-lawyer to work on a case, he or she must supervise them.

• The worst offense Weiner says he's seen is lawyers who are letting non-lawyer[s] use their name to get clients in the door. "For a lawyer to basically sell their name to make it look like a lawyer is basically handling their case when they're not, that is pretty significant," said Weiner.

Source: CA Bar Sounds Ethics Siren Over Foreclosures.

For the State Bar's press release, see STATE BAR ISSUES FORECLOSURE ETHICS ALERT.

Go here and go here for other posts on issues relating to attorneys' professional ethics and the unlicensed/unauthorized practice of law in the context of loan modifications and foreclosure rescue.

(1) See ETHICS ALERT: Legal Services to Distressed Homeowners and Foreclosure Consultants on Loan Modifications. UnauthPractOfLawKappa