Bar News - July 16, 2010
NHBA Supports Attorneys’ Role in Foreclosure Aid
The NHBA supports the creation of legislation to allow attorneys to help financially-strapped clients obtain mortgage relief and avoid foreclosure by amending a recent statute that restricts their role. At its monthly meeting on June 17, the NHBA Board of Governors considered several recommendations on the controversial law, RSA 397-A, as it is interpreted by the NH Banking Department.
Board OKs Actions Re: S.A.F.E. Act
Excerpts of the four recommendations approved by the NHBA Board of Governors:
♦ Write letters to the Banking Department and other state/federal officials similar to those sent by the American Bar Association to the FTC and HUD, regarding the issues raised by the S.A.F.E. Act with respect to its effect upon the practice of law. A small group of volunteers from the Real Property Section have offered to assist in the drafting of these letters.
♦ Develop corrective legislation for RSA 397-A that addresses the provisions preventing attorneys from representing clients in loan modifications, the regulation of the practice of law by the Banking Department and other issues that prevent attorneys from representing clients in private financings. The Association should also consider drafting a statute that revises the effective date of RSA 397-A to coincide with the implementation of the applicable HUD regulations. A small group has been assembled to begin drafting these bills over the summer.
♦ Recommend to the NH Congressional delegation that a legislative solution be implemented at the federal level, working with the ABA and NH members of Congress.
♦ Have the Board explore obtaining an Order of the Commissioner of Banking regarding certain definitional or other issues (e.g. "ancillary").
In addition to potential corrective legislation, the Board of Governors endorsed asking the Banking Department to define a key term used in the law’s narrow exemption for attorney activity in mortgage modification work.
Concerned that the current application of the S.A.F.E. Act to attorneys is preventing the public from obtaining representation in these critical matters, the Board at its May meeting asked the Section to provide input and make recommendations on how to address the issue. Connie Boyles Lane, chair of the Bar’s Real Property Section, discussed the Section’s response, assisted by real estate attorneys, Richard Y. Uchida, an NHBA past president, and Carol Brooks, who chaired a recent CLE program on the subject. Many section members believe that the NH Banking Department is intruding into the regulation of the practice of law by its interpretation and enforcement of RSA 397-A, the NH version of the S.A.F.E Act, which is aimed at protecting consumers by imposing significant licensing requirements for mortgage origination or negotiation activities involving consumers.
Also, many real estate practitioners believe that uncertainty over the law’s provisions have killed a number of real estate transactions involving seller financing. Attorneys say the law is unclear when RSA 397-A applies to sellers offering financing and whether attorneys can be involved in advising clients in these deals.
The Banking Department’s interpretations of the law, discussed at length by state officials at several forums for attorneys in the real estate field and at an NHBA CLE program in May, have produced what several attorneys have termed a "chilling atmosphere" surrounding nearly every attorney’s effort to assist clients with mortgage negotiations. These affect not only the hundreds of consumers who are behind on mortgage payments and are seeking help to halt foreclosure, but even include self-financing deals for commercial properties that might include a dwelling such as an apartment above a store.
The NHBA Board endorsed several approaches at both the state and federal levels, and may result in seeking administrative as well as legislative remedies. (See accompanying box.) (Lawrence Vogelman, governor-at-large, abstained on the vote.) The Board’s position generally parallels that of the American Bar Association. It has formally asked the US Department of Housing and Urban Development, which is developing regulations to implement the S.A.F.E. Act, to provide a general exemption for attorneys doing mortgage-modification work. At present, the narrow and undefined exception allows such representation only if it is "ancillary" to another matter involving that client.
The Board also approved the idea of directly asking the Banking Department to issue an administrative order that would prove a practical definition of "ancillary" that could guide practitioners in knowing which cases they could accept in this area.
The Real Property section also recommended that the Board consider the appropriateness of taking an advocacy position in the pending litigation against Concord attorney Dan Dargon, now in superior court. The Board decided against intervening in Dargon’s case at the trial court level, saying that some aspects of the case might not be relevant to the Bar’s concerns about the law itself.
Although the Board did not authorize intervention in any pending cases, it did consider the possibility of filing an amicus brief setting forth the Bar’s position on certain issues if the Dargon case or some other S.A.F.E. Act-related case reaches the NH Supreme Court.
In other action at its June meeting, the Board discussed several rules proposals aired at a public hearing by the Supreme Court’s Advisory Committee on Rules on June 9. The Rules Committee, following the hearing, was expected to approve new criminal procedure rules, mandatory IOLTA participation for eligible attorneys, procedures for med-mal screening panels, and mandated discovery rules in the family division.
Also, the Rules Committee was considering a change to the Judicial Canons Rule 2.2 to clarify that "a judge may make reasonable efforts to facilitate that all litigants, including the self-represented, be fairly heard." The BOG had encouraged the Rules Committee to use more inclusive language ("all litigants") instead of specifying the "self-represented" in the language. Typically, the Supreme Court solicits comments directly before adopting rules recommended by the Advisory Committee.
The Board is scheduled to meet next on July 22.