Law firm sues state over mortgage modification licensing

Published Monday, Nov. 16, 2009 | 9:37 a.m.

Updated Monday, Nov. 16, 2009 | 5:59 p.m.

State identifies companies authorized to modify loans (11-3-09)
Regulations allow controls on loan modification industry (7-10-09)

A law firm active in Henderson and Las Vegas is suing the state over rules requiring licensing of non-attorney employees working on mortgage loan modifications.

Cogburn Law Offices LLC filed suit last week in Clark County District Court against the Department of Business and Industry, Division of Mortgage Lending.

Court records indicate the law firm won a temporary restraining order against the division on Friday. District Judge Valorie Vega also set a Friday hearing on Cogburn's request for a preliminary injunction, which would extend the restraining order while the issue is litigated.

The lawsuit was filed by attorney Terry Coffing of the firm Marquis & Aurbach.

Coffing said Monday that Cogburn Law Offices has not received any notification of enforcement action against it by the Mortgage Lending Division and that the restraining order should preserve the status quo until Friday's hearing.

The restraining order didn't address licensing of non-attorneys. It restrained the division from "suggesting to the public that lawyers licensed in the state of Nevada working at Cogburn Law are not duly qualified to assist clients and/or potential clients in loan modifications, short sales and/or deeds in lieu of foreclosure."

The division was also restrained from failing to include lawyers licensed in Nevada in its list of qualified companies permitted to provide loan-modification services.

Coffing said the State Bar of Nevada, which regulates the legal industry, has expressed concern over the rules and he hopes the bar intervenes in the case on Cogburn's side.

He said Jamie Cogburn, co-founder of the law firm, supports regulation of the loan modification industry to ensure consumers are not harmed by scam artists.

But the division's rules are too broad, including provisions attempting to regulate the practice of law, Coffing said.

The suit says that attorneys were specifically excluded when the Nevada Legislature passed a bill this year regulating loan modification companies and firms assisting with short sales and deeds in lieu of foreclosures.

But now, the Mortgage Lending Division has imposed rules requiring staff members associated with or employed by attorneys to be licensed, the suit charges.

"Such regulation not only enlarges the scope of (the law), but attempts to govern and regulate the practice of law by forcing employees of an attorney to be licensed and governed by the Nevada Mortgage Lending Division," the lawsuit charges.

Cogburn also charges in its suit that it was wrongly not included on a Nov. 3 list of companies eligible to conduct loan modification services.

The law firm says some clients called the state agency and were told its "employees were foreclosed from talking with the banking institutions in any capacity, assist the attorneys in the loan modification, short sale and deed in lieu of foreclosure process unless the employees of the Cogburn Law Offices received a separate license from the division."

This conduct "has harmed and will continue to harm Cogburn Law Offices as it provides false information to the public, misleads the public regarding the ability of Cogburn Law Offices to conduct activities related to loan modifications, short sales and deeds in lieu of foreclosures and significantly reduces the credibility and goodwill of Cogburn Law," the lawsuit charges.

Cogburn is seeking a court declaration that its legal staff and employees are exempt from licensing, including provisions requiring they be bonded and take continuing education classes.

A request for comment was placed Monday with the Mortgage Lending Division.

Ian Hirsch, owner of Fortress Credit Services in Las Vegas, was critical of efforts by the attorneys to avoid licensing for their paralegals and staff involved in loan modifications.

He said one of the purposes of licensing was to rid the industry of "bad players."

"A good number of those bad players were law firms," he said.

Hirsch said that one of the purposes of licensing was to provide a means for consumers to have fees refunded if loan-modifiers fail to modify loans. But law firms want to get paid regardless of whether they are successful in winning modifications, he said.

Discussion: 10 comments so far…

By mred

11/16/09 at 10:26 a.m.

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I'm a Lawyer!
By CynicalObserver

11/16/09 at 1:51 p.m.

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This is an important case which has a lot of precedent in other states, where cities, counties and state agencies other than State Bar attorney licensing organizations have tried to "regulate" lawyers.

Usually those regulations involved trying to force lawyers to break attorney client privilege relating to lawyers acting as lobbyists for their clients.

Obviously, the plaintiffs' position in this case is technically correct, that only the State Bar can regulate lawyers.

However, what should be of great concern were the ads on Craigs List, over the last 3 months, in the legal employment category, with "foreclosure advice mills" looking for Nevada lawyers to front for them, and for Nevada paralegals to work for them.

The bottom line is that the Nevada Bar has to police its members, to keep them from harming desperate consumers. They need to do that to keep non-lawyer public agencies noses out of the business of regulating lawyers activities and breaking the attorney client privilege barrier.
By wizardofOz

11/16/09 at 4:45 p.m.

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Here. We. Go. Again.

Another law firm standing up for "BOILER ROOMS".

Just what Nevada needs now. More BOILER ROOMS.

Have you talked on the phone calls with these "operations" before they were licensed? What a scam.

These phone-people get your name from lists available to anyone who looks hard enough. What a shame. Nevada homeowners who are legitimately in trouble get preyed upon by these shysters.

And these "phone mills" hire anyone with "phone 'sperience". "Closers". "Heavy Hitters". "Paid Daily". "Bring Your Crew". Before licensing, these phone-people MOVED IN FROM OUT OF STATE JUST TO GET THESE "PHONE-JOBS" 'cause it got too hot for them elsewhere and they saw a chance to make big-time BUCK$$$ off of Nevadan's misfortunes.

And now they want to make Nevada one big "BOILER ROOM".

Our state needs to protect Homeowners from these "foreclosure help" scam artists.

The law that is passed is a LEGITIMATE LAW that protects the truly vulnerable from malicious intent. Licensing of ALL persons in the foreclosure modification industry is what is warranted here in Nevada.

PROTECT VULNERABLE NEVADA HOMEOWNERS NEEDING IT THE MOST...!
By KillerB

11/16/09 at 6:41 p.m.

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wizard -- your ignorance is showing again.

"And now they want to make Nevada one big "BOILER ROOM".

-- that's jobs. In case you haven't noticed there's not a lot of them out there right now.

"Our state needs to protect Homeowners from these "foreclosure help" scam artists."

-- what do you really know about this besides headlines? Evidently not much at all.

"The law that is passed is a LEGITIMATE LAW that protects the truly vulnerable from malicious intent."

-- no, it's not. The REAL scam artists are institutional, starting with MERS and its pilot fish. Nothing in that law appears to address them at all -- maybe because of their lobby.

"Licensing of ALL persons in the foreclosure modification industry is what is warranted here in Nevada."

-- licensing has never been the cure. Instead it's just an underhanded way for the state to get lots of money and keep its employees looking busy while the band-aid measures state legislatures passed are, as Cynical Observer has correctly pointed out.
By wizardofOz

11/16/09 at 7:47 p.m.

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KillerB:

You obviously are caught up on your payments.
By KillerB

11/17/09 at 2:28 a.m.

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"You obviously are caught up on your payments."

wizard -- again, you've shown here you know nothing.
By wizardofOz

11/17/09 at 9:07 a.m.

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I know quite a bit, and here's some of what I know:

KillerB is one of those types you meet at parties who believes that it should be legal for butcher shops to add Borax to "pretty up" the GREEN meat (so long as no one complains or gets sick), peddle controlled "medications" to sick people out of the trunk of your car, and believes that there should be NO stop signs or traffic lights (you're on your own, baby).

Now he's defending BOILER ROOMS (and the LOSERS who run 'em) and he wants to keep them hawkin' "solutions" to Nevadan's foreclosure grief.

KEEP NEVADA SAFE FROM THESE SHYSTER CRUMBS...!
By KillerB

11/17/09 at 11:13 a.m.

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wizard -- you show here you're quite willing to make it all up as you go along. Again, you know nothing. You've also shown you're quite irrelevant to any reasonable Discussion like this. Expect to be disrespected and ignored.
By wizardofOz

11/17/09 at 4:41 p.m.

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If you enjoyed KillerB's position on these shyster BOILER ROOMS he wants to keep in business, then you're gonna be head over heels in love with his flagrant over-the-top posts on this one:

http://www.lasvegassun.com/news/2009/nov...
By wizardofOz

11/17/09 at 6:18 p.m.

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And don't miss this peach from today's Premier Loan Modification News Outlet: loanworkout.org

http://loanworkout.org/2009/11/loan-modi...

(You will especially love the part about the exotic dancer, the jewelry and all the furs...and that 12 year prison sentence for this foreclosure "vulture"...)

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