Notice from the Washington Attorney General’s Office: Beware of Loan Modification Scams Soliciting Washington Lawyers

Alert!

From the Washington Attorney General’s Office:

The Washington Attorney General’s Office, the Washington Department of Financial Institutions, and other state agencies across the country, along with the Consumer Financial Protection Bureau and the Federal Trade Commission, are conducting a mortgage rescue fraud sweep, taking legal action against companies who prey on homeowners seeking to avoid foreclosure.

As part of the sweep, Attorney General Bob Ferguson wishes to alert Washington lawyers to problems that may arise from working with a for-profit loan modification or foreclosure rescue company as part of their practice.

Such companies are often located out of state and could be attempting an end run around state regulations and consumer protection laws by integrating Washington lawyers into their operation. These companies typically promise Washington borrowers that they can modify their loan, stop or postpone their foreclosure, or reduce their debt — usually for a hefty upfront fee.  Not only do they typically not perform as promised, they also divert borrowers from meeting with state housing counselor to evaluate their options at no charge, see www.homeownership-wa.org/ and 877-894-HOME, or getting information about legal aid services at http://ocla.wa.gov/aboutOCLA.htm.

Such companies may be operating in violation of this state’s Mortgage Broker Practice Act, the Washington Debt Adjusting Act (RCW 18.28), the Credit Services Organization Act (RCW 19.134), the Distressed Property Conveyance Act (RCW 61.34), and the Consumer Protection Act (RCW 19.86) as well as the FTC’s Mortgage Assistance Relief Services Rule (MARS). Attorneys may become subject to the MARS and state laws by allowing their name to be used in solicitations without actively providing legal services to clients, sharing legal fees for MARS-related services with non-attorneys, or helping non-attorneys engage in the unauthorized practice of law. In addition, working with a for-profit foreclosure rescue company may result in inadvertent violations of the Rules of Professional Conduct, and result in disciplinary action from the Bar Association.

For further information:

2 thoughts on “Notice from the Washington Attorney General’s Office: Beware of Loan Modification Scams Soliciting Washington Lawyers

  1. Ethyl Beckett

    The relevant question to keep in mind is whether the proposed commitments –in their current form- are apt to address the concerns identified by the Commission in its preliminary assessment Glennon

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