A License to Steal?

Just as some businesses really focus on their clients, and others do not, some Attorney’s do a great job representing their clients and others prefer to use their “license to steal”.  Businesses that provide quality services should flourish, those that do not should be closed. This rule should also apply to the legal community.

Several clients have told us about retaining lawyers to help them with their loan modification, and after 4-6 months pass, still nothing has been done. When the bank is called to find out what’s happening, there is no record of any firm contacting the bank. Other clients report being charged for reading and sending emails or listening to a voice mail.

Below you will find details on filing a complaint against an Attorney that has either not provided you a legitimate service, or has simply overcharged for it. I also recommend filing a Rip Off Report as this often will show up in web searches.

Information about disputes with lawyers

All Arizona attorneys must follow the Rules of the Arizona Supreme Court, including the Rules of Professional Conduct contained in Rule 42. The Attorney/Consumer Assistance Program (A/CAP) acts as a central intake office for all inquiries concerning the conduct of attorneys in Arizona. At times,A/CAP can help resolve some disputes with attorneys before the filing of charges. Other, more serious matters are referred for investigation.

Here are a few examples of the kinds of conduct the State Bar has authority to investigate:

1. A lawyer does not do what he or she has promised or does not do it in a timely way.

2. A lawyer continually fails to respond to inquiries about the case, to tell you about court dates or to appear in court.

3. A lawyer lies or advises you or someone else to lie in the course of a case.

4. A lawyer represents you as well as another person whose interests conflict with yours.

5. A lawyer will not give you money he or she is holding on your behalf or will not give you a full written accounting.

You should also be aware of what the State Bar cannot do.

1. The State Bar cannot investigate complaints of malpractice or resolve legal issues.
2. The State Bar does not investigate complaints against judges. Complaints against Arizona judges should be referred to the Commission on Judicial Conduct, Phoenix, AZ, 602-542-5200.
3. The State Bar does not investigate complaints against lawyers who are not licensed in Arizona unless they are practicing law in Arizona. Complaints usually must be filed in the state where the lawyer is admitted.
4. The State Bar informally investigates complaints about non-lawyers and then refers appropriate complaints to other agencies for prosecution.
5. To begin the discipline process, charges must be sent to the State Bar in writing.
A client has the right to end his/her relationship with a lawyer for any reason. However, not every reason is grounds for the Bar to discipline the attorney. Lawyers sometimes make mistakes that upset clients, but that do not constitute ethical violations. In addition, if there is a dispute over legal fees, the parties are encouraged to use the State Bar Fee Arbitration Program, which provides a low cost method for resolving fee disputes. The cost of legal services is generally left to an agreement between the lawyer and the client. Starting December 1, 2003, with very few exceptions, a written fee agreement will be required between a lawyer and client.
The State Bar may not give legal advice; however, they do ask that ethical violations be brought to their attention. What happens after a bar charge is filed?
If you file charges against a lawyer, State Bar counsel will review it to determine whether an investigation is appropriate. If an investigation is appropriate, a copy of what you have submitted will be sent to the lawyer, who will be asked to submit a written response to your charges. In most cases, you will receive a copy of that response and be given a chance to send additional information.
If your information does not meet the threshold for an investigation, you will be notified of that fact. A copy of the charges will be sent to the lawyer for informational purposes. If, after investigation, the State Bar determines that there is enough information to believe that the lawyer violated the ethics rules and there is clear and convincing evidence to show the violation, formal disciplinary charges may be filed against the lawyer. Under those circumstances, a hearing may be held, and you may be required to appear as a witness.
Because of the volume of complaints received, the State Bar relies on written submissions.
If you have any questions about an Arizona attorney’s conduct, contact the State Bar of Arizona, 4201 N. 24th Street, Suite 200, Phoenix, AZ, 85016, 602-340-7280. Other states have a Bar representation also and can be found with a simple search.

Deficiency Judgments & Strategic Defaults

It’s painful to lose your house to foreclosure, but many feel a relief to put that biggest financial burden behind them. Former homeowners will be hearing a lot about “deficiency judgments” this year because even if your bank  approves you to sell your home for less than it is worth, you could still be left on the hook. Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances — like unemployment or a job transfer — can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

After the banks foreclose, it’s very common to have large deficiencies with houses not worth the balances owed. Whether banks can and will pursue deficiency judgments against you depends on many factors, including what state you live in and whether there’s a second mortgage or other liens. There are a whole host of details to be aware of which is why we spend so much time with each client before pursuing the negotiations for them.

Some states don’t allow deficiency judgments. But, even if the original loan was refinanced, or a HELOC was taken out after the original purchase, some or all of it may be subject to claims. Deficiency judgments on short sales and deeds-in-lieu are becoming much more common. In these cases, extinguishing the debt is often a matter of negotiating with the bank. Negotiating is what we do best. It is vital to have an experienced negotiator on your side. There are so many factors involved such as the size of the loan, whether there is a first mortgage only, or a second, and the timing of origination and amount of the second.

Banks have sold many of these accounts to collection agencies and other third parties, at discount so they will be going after their loses. Do not make the mistake of thinking the bank is your friend, or that they’ll do you any favors, they will not.

What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn’t have to be a large amount of debt for a lender or collection agency to come after borrowers. Some borrowers have reported getting served a  judgment 2, 3, even 4 years later in some states. Even if they released title once the transaction was closed doesn’t mean it’s done. Releasing title does not necessarily end the debt. It’s complicated because of variations in state law. Here in Arizona there are two parts – one is the Note and the other component is the Deed of Trust that secures the property. Not all states are like AZ.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Strategic defaults is the new term we’ll all hear more about in 2010 and 2011. Sometimes lenders go after borrowers walking away from their homes if they have other assets. Remember, by law, you cannot benefit from a short sale. Banks are pulling credit reports to see if it’s a strategic default. In other words, If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you. Because they know that you’re late on the the mortgage but are choosing to pay other obligations.
If borrowers have any doubts about their risks, they should seek legal advice. We have General Counsel that can answer all your questions so that you can mitigate your risk. Contact us if you have any questions.