(Update: Quote from BAR trial attorney added.)
One state regulator has faced a hurdle in trying to stop companies from scamming people who need help avoiding foreclosure. But this week another agency stepped in to join the fight.
The California State BAR on July 7 filed its first disciplinary case against an attorney related to the burgeoning, and sometimes messy, loan modification business.
The BAR lags the California Department of Real Estate (DRE), which has ordered more than 100 companies and individuals to stop negotiating for changes to the terms of a client’s mortgage, or collecting money for promising to do so. The DRE has reprimanded those acting without a real estate license or accepting advance fees without first getting approval.
But the Real Estate Department has no authority over lawyers, who can accept fees and negotiate changes to a loan contract without a real estate license.
Enter the state BAR. It has issued warnings to all members, but until now hasn’t gone after individuals. But on Tuesday it filed a notice of disciplinary charges against Sean Rutledge (pictured), a lawyer with United Law Group in Irvine.
The notice accuses Rutledge of taking $1,750 from a homeowner in November 2008 but never making an effort to get his loan modified. After the client requested a refund, it took months to get his money back and the client had to first sign a document releasing Rutledge of all legal liabilities, according to the filing.
Rutledge, in a statement to the Register, said he could not comment on anything related to a former client. He also said the following:
“United Law Group is dedicated to helping people to stay in their homes. Unfortunately, it appears that the banks are committed to thwarting our efforts on behalf of our clients. This complaint comes on the heels of two major lawsuits filed against Bank of America and JP Morgan Chase by United Law Group. Coincidence? You decide.”
“United Law Group has worked with the banks to modify loans on hundreds of homes. The firm has countless testimonials from people who have gone on record to highlight the result of our efforts. The real question to ask yourself is how many homes will the State Bar’s persecution of myself and other real estate attorneys save?”
“I believe this complaint is indicative of a deeper societal issue. As long as there have been attorneys, there have been satisfied and unsatisfied clients. When the court rules in favor of one person, they rule against another. When we accept a case we make it very clear to our clients that there are no guarantees. Each client who retains our firm … is asked 21 questions to verify that they understand this.”
Diane Curtis, a spokeswoman for the BAR, said in disciplinary cases attorneys face a range of punishments, from nothing to disbarment.
Russell Weiner, acting chief trial counsel for the BAR, said, “Attorney misconduct in connection with the provision of loan modification services is a significant and growing problem. It is unfortunate that any attorney would fail to adhere to the highest ethical standards in providing legal services to a vulnerable client possibly facing the loss of their home.”
