SAFE Act - How Should it Apply to Attorneys?
SAFE Act update: March 30 message to Real Property Law Section from Connie Boyles Lane, Section Chair
The Banking Department issued a decision in its administrative action against Attorney Dan Dargon and his firm on 2/14/11. You can read the decision on the Banking Department's website.
The Banking Department determined that Attorney Dargon was in violation of RSA 397-A and specifically addresses the "ancillary" language in the attorney exemption (RSA 397-A:4 V) on pages 27-29 of the decision. The analysis of the hearing officer is that representing a client solely in connection with a loan modification is not "ancillary" and, therefore, an originator's license is required under RSA 397-A. This is consistent with the commentary in the proposed HUD regulations.
On March 24, 2011, the Department issued another order related to a motion for rehearing filed by Attorney Dargon. In that order, the hearing officer postponed the hearing on the Motion to a future undetermined date in order to allow the parties time to gather the evidence needed for the hearing. [Read the order.]
Even though legislators were sympathetic to the plight of consumers who cannot receive legal assistance with their loan modifications, our understanding is that virtually all bills related to amendments of RSA 397-A have been tabled. The legislators are hoping that the upcoming HUD regulations will address the issues raised in the legislation, making it unnecessary for them to act. Based on what we know at this point, I think that their hopes are unfounded. The regs are anticipated in early July. The Banking Department testified against both bills supported by NHBA (HB 408 and HB 613) stating that HUD would find the amendments in violation of the Safe Act and take over the regulation of originators in NH. The mortgage bankers association opposed the bills; the real estate brokers supported both bills. Kudos to Maria Sapienza, who sponsored both bills and testified eloquently on their behalf; kudos also to Jackie Fitzgerald and Carol Brooks for their excellent testimony on behalf of the bills. Carol Brooks and I met recently with Celia Leonard, counsel of the Banking Department, to explore possible compromise positions with the Department. In short, the Banking Department is not willing to give attorneys an exception and will not issue anything that provides more guidance about the definition of "ancillary". We may be able to develop special licensing procedures for attorneys, and will continue discussions around that possibility.
I am going to speak briefly (10 minutes) about these developments in more detail at the upcoming Title Standards NHBA•CLE on 4/6/11.
I wish I had better news to share. We will continue to pursue these issues on behalf of the Section and NHBA, and I will keep you posted. I suggest that you continue to speak in favor of these bills to accountants, real estate brokers and NH state representatives/senators.
♦ Legislators Hesitate on NH SAFE Act Revision, NH Business Review - September 23
♦ Foreclosure Assistance
♦ Administrative Hearing Decision: Banking Dept. vs. Dargon Law Firm - February 14
♦ SAFE Act Poses Problems, NH Business Review - December 17
♦ Attorney raised alarm over firm, Concord Monitor - December 11
♦ Playing it safe - Benjamin Frost, an attorney and director of public affairs, NH Housing Finance Authority - November 2
♦ Mortgage firm workers could be on hook, Concord Monitor - October 23
♦ Local homeowners among those struggling to make home-loan aid program work, Nashua Telegraph - August 13
♦ NHBA Supports Lawyers' role in foreclosure rescue efforts - Bar News - July 17
♦ Slow Progress in Court's Mortgage-Modification Mediation, Concord Monitor - June 19
♦ Attorneys: S.A.F.E. Act Shouldn’t Apply to Lawyers, Bar News - June 18
♦ S.A.F.E. Act in NH: Chronology, Bar News - June 18
♦ Real Property Section meeting re. S.A.F.E. Act and proposed recommendations for BOG - June 8
♦ ABA Request Re: Financial Markets Reform, ABA Grassroots Action Alert
♦ S.A.F.E. Act Hinders Residential Seller Financing, Portsmouth Herald - May 28
♦ Self-Study CLE: Be Safe! Understanding the NH S.A.F.E. Act and its Licensing Requirements for Attorneys
♦ Archived version of Be Safe! Understanding the NH S.A.F.E. Act and its Licensing Requirements for Attorneys
♦ Ruling Halts Banking Dept. Order Against Attorney, Union Leader - April 27
♦ Atty, Commissioner Differ on Judge's Ruling, Concord Monitor - April 27
♦ Court Order re: Dargon v. Commissioner Hildreth and the NH Banking Dept. - April 26
♦ A Concord lawyer, NH Banking Department clash over laws, Concord Monitor - April 18
♦ NH Banking Dept. Show Cause & Cease & Desist Order In Re: State of NH Banking Dept. v. Dargon - April 1
♦ ABA to FTC : Broaden Attorney Exemptions in S.A.F.E. Act - March 29