The Florida Bar
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January 15, 2010
New law requires all loan modifiers to be licensed

Lawyers representing clients are exempt from the statute

As of January 1, private businesses offering loan modification services to Florida homeowners must be licensed by the state of Florida, but that law does not apply to lawyers who are representing clients though a bona fide law office or authorized business entity as outlined under the Rules Regulating The Florida Bar.

A law passed last year by the Legislature required that as of the new year, private companies and individuals register with and be licensed by the state if they offered to help troubled homeowners work with lenders. The law was a response to massive fraud in that area, which has resulted in the Attorney General filing 17 civil lawsuits on behalf of consumers.

Bar officials met with the Office of Financial Regulation, which handles the modification company licensing, after lawyers inquired whether they were covered by the new law.

The Bar took the position and the OFR agreed that when there is an attorney-client relationship between the homeowner and the provider of modification services established by the attorney and not a third party, then the relationship is properly governed by The Florida Bar and the Rules of Professional Conduct. If there is no such attorney-client relationship, then the loan modification “mill” is just a business and should be licensed and regulated by OFR like any other nonattorney business within its regulation — even if attorneys own or are employed by the nonattorney business. Further, the bar took the position and the agency agreed that nonattorney staff members in a law office would not have to be licensed by OFR as the attorney remains responsible for their conduct.

Lawyers who have ethics questions about their representation of clients in loan modifications should call the Bar’s Ethics Hotline at (800) 235-8619. However, if they have specific questions about the law, they should call OFR. Also, there is an Ethics Alert on the Bar’s Web site in the Ethics Opinions section that discusses ethical issues regarding a lawyer’s involvement with a nonlawyer in providing loan modification and other foreclosure rescue related services.

[Revised: 08-12-2014]