Ethics Alert: Loan Modification Scammers Recruiting Lawyers
Lawyers — especially solo and small firm practitioners and new lawyers — are increasingly the target of loan modification scammers. Do not risk your license! Learn to recognize and avoid these scams.
The scammers seek to recruit lawyers in an effort to circumvent state and federal legislation enacted to protect homeowners from unfair or deceptive practices, including a ban on the collection of upfront fees. Because lawyers are generally exempt from the legislation, scammers are trying to exploit this loophole by soliciting, employing, and partnering with lawyers to provide purported loan modification services.
These relationships may violate the Washington Rules of Professional Conduct and could result in lawyer discipline. Do not risk your license. Recognize these fraudulent schemes for what they are – scams. Avoid giving assistance to these scam artists.
Here are some red flags to help you recognize a loan modification scam:
For lawyers who offer mortgage assistance relief services as part of their practices, upfront fees or retainers can be accepted only if the lawyer performs legitimate legal services and the money is deposited in a client trust account and withdrawn only as actual legal services are performed and the client is notified prior to each withdrawal.
If you believe you have been contacted by a loan modification scammer, please report it to these agencies
Please call our Ethics Hotline at 206-727-8284 or view our other Ethics Resources.
The FTC offers guides for lawyers, The Mortgage Assistance Relief Services Rule: A Compliance Guide for Lawyers, and for businesses, The Mortgage Assistance Relief Services Rule: A Compliance Guide for Business.
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