CBJ - May 2009 #01. Bar monitors lawyer loan modification advertising.

Author:By Diane Curtis

California Bar Journal


CBJ - May 2009 #01.

Bar monitors lawyer loan modification advertising

California Bar Journal May 2009 Bar monitors lawyer loan modification advertisingBy Diane Curtis Staff WriterWith no sign of the foreclosure crisis abating, the State Bar last month began notifying lawyers that the chief trial counsel's office wants to monitor their loan modification-related advertising.

Included in the scrutiny of violations of the Rules of Professional Conduct regarding false and misleading advertising, bar prosecutors will be looking at whether lawyers are guaranteeing success in securing loan modifications or are implying that they have expertise or a special license from the State Bar to work on foreclosure cases, said Chief Trial Counsel Scott Drexel.

"Consumers are under very difficult circumstances facing the prospect of very quickly losing their homes, so they're desperate to do something, and it makes them more susceptible to fraud," Drexel said. He said his office was making oversight of attorneys involved in loan modification a priority. "There is a need to act as quickly as possible because the consumers who go to these people are on the verge of losing important rights."

Deputy Trial Counsel Victoria Molloy, who is sending and monitoring the letters, said consumers, especially in Southern California, are "bombarded" with loan modification ads on radio and TV. "You can watch TV for an hour and see five or six ads," Molloy said.

"Given that, plus the increased volume of calls we're getting to the 800 line - with people complaining about hiring loan modification companies and then not getting what they bargained for - we felt it was important to look at loan modification as more of a global issue than a case-by-case issue."

According to Realty Trac, 13 of the 25 metropolitan areas nationwide with the most foreclosures are in California.

For several months, the bar has been receiving between 850 and 900 calls a month to its complaint hot line from consumers regarding foreclosures or loan modifications, although many calls have nothing to do with lawyer misbehavior. Attorneys, many of whom are being approached by loan consultants to work with them, also have been calling the ethics hotline about the foreclosure or loan modification business at the rate of 235 per month.

The letters sent out to...

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