Attorneys Offering Loan Modification Services Find a Friend in NACBA

The Crisis Commission on Homeowner Representation Finds a Friend in the National Association of Consumer Bankruptcy Attorneys

I started the Crisis Commission on Homeowner Representation to bring together the legitimate and reputable firms offering to represent homeowners in their negotiations with lenders and servicers over modifications to their mortgages.  I wanted an organization made up of the best or the best, and after more than two months of recruiting, that’s exactly what we’ve got: the top twenty-some firms in the state, no question about it.

It wasn’t easy, however.  In fact, it was down right difficult.  Firms didn’t know each other, and therefore didn’t necessarily trust each other.  Each was concerned with the other; no one wanted to be aligned with a firm that wasn’t doing things right.  With the media telling everyone that all firms that charge fees are scams, I suppose it was understandable.

So, now that the Commission has been formed and its members are about to meet for the first time at a Summer Conference, I have to tell you that it feels darn good.  When I finally see everyone interacting at the upcoming meeting, I’m going to feel a little bit like a proud father.  I’m certain everyone involved will come away smarter and more confident about the future… and that, in my view, represents real progress.

One of the things the Commission has wanted to do from the beginning was lobby against SB 94 as it was written, and that became more important when the bill was modified just before July 4th to prohibit attorneys from accepting retainers in advance of a modification being obtained.  There are many reasons the Commission opposes this provision, and members wrote letters to members of the California Assembly expressing their views.

Then one day, I had the most incredibly coincidental thing happen to me.  I discovered that a relative of mine, Barbara Andelman, was now the Executive Director of the National Association of Consumer Bankruptcy Attorneys (NACBA) the organization that has been battling against the banking lobby in an effort to pass legislation that would reform the bankruptcy code and, among other things, allow bankruptcy judges to modify mortgages.  I contacted NACBA, and after about an hour of “old home week,” Barbara and I found that we had been living parallel lives these last couple of years without even knowing it.

The result was a meeting of the minds and NACBA agreed with our position on SB 94 and wanted to help stop the bill from passing.  What follows is a letter written by Barbara Andelman to the California members of NACBA about a week ago.

There’s going to be a lot more that the Commission members and the NACBA members will do together, and frankly I think it’s very exciting.  The financial crisis is far from over and both loan modification and bankruptcy are going to be needed by distressed homeowners for at least the next several years.

So, what started as me on the phone, feeling very much alone, feels quite different today.  And not only that, but my cousin is so cool I can’t even tell you… she sounds a lot like me, truth be told.  More lawyer-like, but that’s just because she’s an attorney, so I can’t hold that against her… kidding, I’m kidding… I kid, remember.  Sheesh… tough crowd.  Here’s what she wrote to the NACBA members in California just last week:

A Message from Barbara Andelman, Executive Director of the National Association of Consumer Bankruptcy Attorneys (NACBA) to its Members in California, Distributed on Monday, July 13, 2009.

While there have been a very few law firms implicated in loan modification abuses, adequate legal recourse against bad actors in our profession already exists, including disbarment and criminal prosecution for fraud. Because other fly-by-night scammers can pack up and move on to greener pastures on very short notice and don’t have a bar license to lose, it is understandable why consumer advocates would seek protections for consumers against those predators.

However, placing blanket retainer restrictions on attorneys whom consumers may need to represent them is an unconscionable effort to interfere with their legal rights.  We also know that the bills under consideration in Congress addressing judicial modification have included requirements for debtors to make a proper request for a HAMP loan modification to be eligible to seek a home mortgage modification in bankruptcy.  It is highly foreseeable that bankruptcy attorneys across the nation will need to be closely involved in pre-bankruptcy loan modification proposals if such bankruptcy legislation does pass.

Of course, if homeowners are effectively barred from retaining an attorney to help them, lender misconduct in the processing of a loan modification will be much more likely to be uncovered.  Given the widespread and well-documented refusals by lenders to grant loan modifications, lender violations of HAMP will get little or no scrutiny – and surely no consequences for the lenders.

Finally, this effort to restrict lawyers representing consumers can be seen as an extension of BAPCPA’s insidious attempt by banking interests to limit legal access and recourse for bankruptcy debtors.

Stay tuned… there’s going to be a lot more news to come.  We’ll win, because we’re right.  And because, as the Commission’s tag line says, because Homeowners Need Help.

For more information on the Commission on Homeowner Representation, email me at:

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