See UPDATE to this blog and how it was resolved - at FLORIDA FORECLOSURE FRAUD BILL - UPDATE
Governor Crist -
House Bill 643 is a much needed bill and frankly, it does not go far enough to address the fraud and unfair advantages taken by predators. I see this type of work daily in my law practice - and I am assisting one Bar complaint now against an attorney who is not revealing they are participating in Short Sale flip profits of their clients' property.
The problem is with the catch all definition of "Foreclosure Rescue Consultant".
My law practice has as a sub specialty the assistance to persons that have no ability to service their mortgages. The usual answer to this problem is a controlled sale of the property with lender cooperation and agreement to release their lien on the mortgaged property for less than the amount of the mortgage debt.
Under HB 643, as an attorney I would not be able to provide these services to clients unless the payment for the services is made upon successful conclusion of the services rendered.
I am a real estate attorney - not a contingent fee personal injury attorney. The services offered are transactional. Making the fee contingent will stop me from offering this service and remove from the public a much needed service.
For example, my fee is based on a pricing that helps both the small mortgagor and the large mortgagor - I charge one month's principal and interest mortgage payment. The services I offer generally cost me about $2,500. Therefore, those with lower mortgage payments are being subsidized by those with higher mortgage payments. Not all Short Sale or modification attempts are successful, so my costs would go up based on the Bill.
There are attorneys that charge a smaller fee up front and then share in the real estate brokerage fee, or worse, participate with investor profits on the purchase and flip of the property. I believe that arrangement and indeed any contingent fee arrangement is a conflict of interest with the client because it encourages not fighting for the best price buyer or best deal with the mortgage holder with the client's interest first. Rather, it encourages getting the deal done at any cost to the client's best interests so the contingent fee is collected as quickly as possible. I do believe that the process and the work to be undertaken by the attorney needs to be specifically spelled out and indeed, I use a three page retainer agreement specific to these services, and we require the client to initial almost every paragraph.
No doubt - the situation is like the Wild West and must be addressed. But effect of HB 643, without proper exemptions for attorneys whose services fall under the definition of "Foreclosure Rescue Consultant", will remove the providing of legitimate and needed legal services to those who most need such services.
I encourage your office to contact me on this matter. My cell phone is included below.
Sincerely,
Richard P. Zaretsky, Esq.
Florida Bar Board Certifed Real Estate Attorney
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This law as written is a pathetic sop to the 501 C3) (3) cronies.
If this section includes attorneys hired by home owners to provide legal services in connection with a pre-foreclosure or foreclosure service, then it is clearly meant to steer home owners in distress to the non-profit cronies.
Funny thing, the non-profits get their grants in advance of doing any work.
This bill may we well intended, but when the government tries to get into the marketplace without knowing the market, all they do is screw things up further.
Thanks for this post. It's very enlightening.