Foreclosure questions

Diane Karpman’s December article, “Beware the meltdown’s temptations,” provided several important and timely cautionary notes to lawyers who might be tempted to participate in what you aptly called “new business models” related to loan modifications. The last paragraph states that “lawyers can … hire in-house loan modification agents so that they can be properly supervised.”

The California Department of Real Estate has learned that some lawyers, using this concept, are offering to hire real estate brokers and salespersons and to supervise the real estate licensees as “paralegals” or as some sort of legal assistants. But this scenario raises a number of issues, which arguably puts the lawyers back in the same ethically questionable realm that the first part of the article addresses.

The California Mortgage Foreclosure Consultants Act was enacted to address the fraud, deception, harassment and unfair dealing by foreclosure consultants relative to homeowners whose residences are in foreclosure. With rare exception, the act prohibits the collection of an advance fee or the payment of compensation in advance of services being performed once a Notice of Default has been recorded. Real estate licensees are covered by this prohibition.

The applicable “lawyer” exemption is for “[a] person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney-at-law.” Section 2945.1 (b)(1).

If a lawyer hires “in-house loan modification agents,” are these non-lawyers performing legal services? Or are they performing “non-legal” real estate-related loan modification services (which would arguably require a real estate license)? Are they practicing law? What legally related training do such “loan modification agents” have? If the lawyer has collected a retainer fee for the services, is the lawyer sharing that fee for legal services with non-lawyers? How is the compensation to the in-house modification agents made? Commission? Salary? Hourly? In the event of an unsuccessful loan modification, the fee(s) payable to the lawyer may be shockingly large when compared to the lawyer’s normal hourly rate charges.

Certainly, there are many more questions and issues that can be posed. Moreover, there are a number of other problematic scenarios which bring into question the applicability of the “lawyer practicing law” exemption. I have lingering concerns about the statement that lawyers can hire in-house loan modification agents.

Wayne Bell
California Dept of Real Estate
Sacramento

No contact necessary

I read with interest the story of the Concord student who won the right to sit for the Massachusetts bar. The article cited the general principle favoring on-campus interaction as critical to later lawyering. Really? Why, I wonder. I cannot remember the name of more than one or two of my law school professors. Justice Bernard Jefferson was one whom I recall but I can only see other faces. That’s all. Too, interaction with them was essentially non-existent. Same with classmates. Going to night school generally cuts that out.

Jim Sweeney
Santa Monica

A place for everyone

I found Holly Fujie’s comments incredibly divisive and offensive. We don’t need someone solely focused on “women and minorities.” Last time I checked, most rational people try to be as inclusive as possible. Ms. Fujie, what message do you think you sent any white male youths who may have read your introduction to the bar? Is there still a place at the table for non-minority males who also want to become lawyers? As someone who has worked and coached with kids I can tell you that white males are being passed over, ignored and blamed for society’s problems at an alarming rate. I’ll be looking forward to the next president who hopefully will represent the entire bar.

Brian Brunkow
San Diego