"I Wish the Law Had Worked": A Dispatch from the Land of Unintended Consequences
Once upon a time, people seeking loan modifications got screwed by lawyers who promised to save their homes, took a few thousand dollars, and disappeared from the face of the Earth. Then the light of regulation shone upon California and a task force was convened, legislation was devised, and everyone smiled when it passed by an overwhelming 36-4 in September 2009.
Now, this:
Lawyers throughout California say they have no choice but to reject clients [seeking help with mortgage modifications] because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts….
Foreclosure specialists say there has been an unintended consequence: the honest lawyers can no longer afford to assist.. others who feel helpless before lenders that they see as elusive, unyielding and skilled at losing paperwork.
Everyone had good intentions. Smart people spend a lot of hours trying to solve the problem. Lenders signed on to the new rules. The result: swindlers continue the same unscrupulous practices and honest lawyers have bowed out.
Suzan Anderson, supervising trial counsel of the California bar's special team on loan modification, sums it up nicely.
"I wish the law had worked," Ms. Anderson said.