Mortgage Assistance Relief Services - Proposed Rulemaking, Rule #546727-00024

Submission Number:
George Holler
Holler Law Firm, LLC
Initiative Name:
Mortgage Assistance Relief Services - Proposed Rulemaking, Rule
I strongly support restrictions on these "Foreclosure Rescue" operations which are really a amalgamation of the same mortgage brokers who got us into this mess and former real estate attorneys who need the work. Often these attorneys completely ignore the rules of professional ethics which prohibit person to person marketing, by employing former mortgage brokers to telemarket distressed borrowers. That said, I object to the requirement that no fees can be earned before the attorney provides the result that consistent with consumer's reasonable expectations. As an attorney who follows the rules of ethics I cannot promise any particular result. I also cannot afford to provide debt relief services if I cannot be paid when things don't work out the way my client expects despite my best efforts. I run a firm consisting of two attorneys and three paralegals. We represent debtors in bankruptcy and foreclosure defense. Often our best result in the foreclosure defense arena is obtaining a delay in the process. This delay allows the debtors to save money that they will need to move to a rental. I cannot promise that I will stop the foreclosure (there is usually no defense), but I can file motions which will slow the process (which is very helpful to people facing a move which will cost them thousands of dollars). I charge these debtors an hourly fee for my time. I worry that these new rules will put us out of business. Certainly the last thing we want to do is limit the relief available to debtors in these troubled times. As an example if a client comes to me seeking help with a short sale or a deed in lieu of foreclosure, I cannot determine whether or not the lender will agree. If I cannot collect any fee unless I deliver a short sale or deed in lieu, I simply cannot represent that client. That leaves the client without representation in dealing with lenders. That is just bad for consumers. As an alternative to this advance fee ban, the FTC could limit fees to the reasonable value of the services as they are earned by the attorney. Attorneys are already subject to such restrictions by state codes of professional ethics. It seems to me that greater enforcement of the existing rules would address this problem int he attorney context while preserving the ability of honest attorneys to service these clients. As for affiliations between law firms and MARS, I strongly support prohibitions which prevent law firms from working with companies not under the direct supervision of an attorney. In Connecticut our rules would prohibit that already. Again it seems that increased enforcement of current rules on attorneys would be a better solution than new prohibitions which will hurt clients. With regard to attorneys helping borrowers get loan modifications outside of the bankruptcy context, there is really nothing that I, as an attorney, can bring to the table. In instances where I have attempted to assist clients in this process I have found that lender DO NOT negotiate, nor are there clear rules as to when a lender must offer a modification which an attorney can review for compliance. The borrower can make the same phone calls I can for free so I do not take these types of cases (nor do most of my fellow NACBA members). I would extend the attorney exemption to cover short sale/deed in lieu negotiation as that is an area where we can bring something to the table.