Tuesday, January 26, 2010
New Law Requires All Loan Modifiers to be Licensed but Lawyers Representing Clients Are Exempt
On January 1, a new law took effect requiring that private businesses offering loan modification services to Florida homeowners must be licensed by the state of Florida. However that law does not apply to lawyers who are representing clients though a bona fide law office as outlined under the Rules Regulating the Florida Bar.
This law passed by the Legislature requires that all private companies and individuals must first be registered with and licensed by the state in order to offer help to troubled homeowners working with lenders. This law hopes to eliminate massive fraud that has taken place around the state, many of which have resulted in the Attorney General filing civil lawsuits on behalf of consumers.
The Florida Bar and the Office of Financial Regulation agreed that when there is an attorney-client relationship between the homeowner and the provider of modification services established by the attorney and not a third party, then the relationship is properly governed by The Florida Bar and the Rules of Professional Conduct. If there is no such attorney-client relationship, then the loan modification “mill” is just a business and should be licensed and regulated by OFR like any other nonattorney business within its regulation — even if attorneys own or are employed by the nonattorney business. Further, the bar took the position and the agency agreed that nonattorney staff members in a law office would not have to be licensed by OFR as the attorney remains responsible for their conduct.