Mortgage Modification: The Hottest Minefield in Legal Practice

Mortgage modification — it might sound like a hot little area for a real estate lawyer who wants to augment a slow practice these days. Turns out, it isn’t likely to bring lawyers large sums of money, and can lead the uninitiated into hot water.

Fishkin tells it like it is on Tuesday (Photo by Jason Doiy)

At least that’s how Walnut Creek legal ethics attorney Jerome Fishkin broke it down Tuesday at a lunchtime talk for members of the San Francisco Trial Lawyers Association. About 25 plaintiffs’ attorneys descended on the Bush Street conference room for pizza and advice on a number of topical ethics topics.

Fishkin, who defends practitioners in State Bar actions, said he has 10 active cases representing lawyers involved in mortgage modification work. A couple came from consumer complaints, a few others are advertising inquiries from the California State Bar. One is a lawyer swept up in an attorney general’s lawsuit against a company and anyone associated with it.

The ways Fishkin says lawyers get themselves in trouble:

• Because it’s hard to make a living doing mortgage modifications, lawyers tend to hire a lot of back-office staffers to do the work. That can lead to questions about letting unlicensed people practice law in their stead.
• Not paying attention to the geographical location of lenders and borrowers, and inadvertently practicing law in two or three states. If the borrower is in Nevada and the lender in California, and something goes wrong, the lawyer might get sued in Nevada.
• A whole host of regulatory agencies is watching. The Department of Real Estate has been harvesting names of any and all lawyers connected with mortgage modifications, which they pass indiscriminately to the State Bar. The Federal Trade Commission might also take interest, though Fishkin said he hasn’t seen that happen yet.
• Finally, even if a lawyer avoids the above pitfalls, there is always the danger of the super-autonomous back-office team. If they are running most of the show, they might just run off with your money, Fishkin warned.

In addition to his clients, Fishkin says he has a whole collection of Thank You notes from lawyers happy he talked them out of going into the business.

— Petra Pasternak

Comments

[Joe Reisinger]

Fishkin says:

I'm delighted to see Jerry Fishkin is adding his 2 cents worth on the mortgage modification mess. While I don't recall having ever met Mr. Fiskhin, before my retirement from hardcore insurance defense practice, I defended a fair number of lawyers: mainly on E&O claims that often morphed into breach of fiduciary duty cases.

In the conversation about what path these "clients" (insureds) took to become defendants in a civil action, Fishkin's name often came up in the context of "If only I had done what Fishkin had said...".

Since this scenario pretty consistently repeated itself for nearly three decades, I speculate that if Mr. Fishkin says a certain area is ripe with legal/ethical pitfalls, he's most likely correct.

[olique estefan]

You inspired me to be a blogger, thank you for that
This is a very touching blog, If I only could have had an idea I wish I had read the material on here sooner. Thanks for sharing everything this is a very nice blog

[Ron Stone]

Truly dangerous waters but real, sincere, professional mortgage modification assistance is desperately needed today.

[Liz@buytoletmortgages]

It is absolutely shocking the state of the mortgage and workplace, and innocent people are paying for the banks mistakes. On top of this, savers are nowing being hit by no interest, where is the justice in all this.