(Update: Quote from BAR trial attorney added.)
One state regulator has faced a hurdle in trying to stop companies from scamming people who need help avoiding foreclosure. But this week another agency stepped in to join the fight.
The California State BAR on July 7 filed its first disciplinary case against an attorney related to the burgeoning, and sometimes messy, loan modification business.
The BAR lags the California Department of Real Estate (DRE), which has ordered more than 100 companies and individuals to stop negotiating for changes to the terms of a client’s mortgage, or collecting money for promising to do so. The DRE has reprimanded those acting without a real estate license or accepting advance fees without first getting approval.
But the Real Estate Department has no authority over lawyers, who can accept fees and negotiate changes to a loan contract without a real estate license.
Enter the state BAR. It has issued warnings to all members, but until now hasn’t gone after individuals. But on Tuesday it filed a notice of disciplinary charges against Sean Rutledge (pictured), a lawyer with United Law Group in Irvine.
The notice accuses Rutledge of taking $1,750 from a homeowner in November 2008 but never making an effort to get his loan modified. After the client requested a refund, it took months to get his money back and the client had to first sign a document releasing Rutledge of all legal liabilities, according to the filing.
Rutledge, in a statement to the Register, said he could not comment on anything related to a former client. He also said the following:
“United Law Group is dedicated to helping people to stay in their homes. Unfortunately, it appears that the banks are committed to thwarting our efforts on behalf of our clients. This complaint comes on the heels of two major lawsuits filed against Bank of America and JP Morgan Chase by United Law Group. Coincidence? You decide.”
“United Law Group has worked with the banks to modify loans on hundreds of homes. The firm has countless testimonials from people who have gone on record to highlight the result of our efforts. The real question to ask yourself is how many homes will the State Bar’s persecution of myself and other real estate attorneys save?”
“I believe this complaint is indicative of a deeper societal issue. As long as there have been attorneys, there have been satisfied and unsatisfied clients. When the court rules in favor of one person, they rule against another. When we accept a case we make it very clear to our clients that there are no guarantees. Each client who retains our firm … is asked 21 questions to verify that they understand this.”
Diane Curtis, a spokeswoman for the BAR, said in disciplinary cases attorneys face a range of punishments, from nothing to disbarment.
Russell Weiner, acting chief trial counsel for the BAR, said, “Attorney misconduct in connection with the provision of loan modification services is a significant and growing problem. It is unfortunate that any attorney would fail to adhere to the highest ethical standards in providing legal services to a vulnerable client possibly facing the loss of their home.”
More from this blog…
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- Pimco passes on U.S. toxic-asset plan
- How to make an unaffordable mortgage affordable
- Mortgage fraud is ‘rampant’
- Delinquencies on home-equity loans, credit cards hit records
- Loan servicers prefer big losses to loan forgiveness
- Profiting from an Irvine bank failure
- Buying an investment property? Some loan tips…
- Mortgage rates plummet
- These O.C. homes are about to be foreclosed
- O.C. mortgage delinquency jumps again
- 125% refinances allowed on troubled mortgages
- Distressed housing inventory down 46% since December
I wouldn’t trust any attorney who doesn’t understand the proper use of the reflexive pronoun “myself”, as the second paragraph of his statement above reveals.
Also, I’d hate to answer 21 variations of the same question before I could pay this guy to start working on my behalf (or is that myself’s behalf?).
[The notice accuses Rutledge of taking $1,750 from a homeowner in November 2008 but never making an effort to get his loan modified. After the client requested a refund, it took months to get his money back and the client had to first sign a document releasing Rutledge of all legal liabilities, according to the filing.]
Sounds like a crook to me. At the very least, he provides terrible customer service. Taking months to refund the client? Yeah, definitely indicative of “dedicated to helping people to stay in their homes.” Bull poop!
What a scum-bag !
Matt - Are you deleting comments? What happened to the “free psychics” comment that was here first?
Yes, I delete comments.
The link wasn’t an advertisement for psychic services. Anyway, with the Web it’s hard to tell what’s real… someone could write/post something under someone else’s name.
True on both counts, but if you looked at the site, it looks like Rutledge. I figured it was just free publicity for this guy. He gets his name, firm, and website plastered around (even on odd sites), and even if nobody sees it, it ups his rating on Google just due to the backlinks.
Rutledge needs to do time!!!!!
I am still sure that the law firms are doing a better job then the firms that the DRE is refusing to go after because they are “too busy”
“no fee agreement? we will get to you next year.. ”
Its time the DRE does something instead of just sitting around collecting money for , just, sitting around..
I see Rutledge is already attempting to change the debate - so it is about “helping homeowners”, rather than about the actual issue at hand (you know, his alleged ethical misconduct).
I don’t think people appreciate just how much damage is being done in the name of “helping homeowners”.
When people are at their lowest, only slime step in to rip them off. People devoid of ethics and values should be prosecuted. We need more government crack downs on agencies that should be monitoring this kind of stuff.
Actually, $1750 is a pretty low fee. I know lawyers who are charging upwards of $7500-$10K for this service. Half up front, half when done…
Maybe you do get what you pay for.
So if borrowers have that kind of money sitting around, why do they need a mod again?
How much do you want to bet that the attorney told the client that the retainer was non-refundable? Or sent letters saying they were going to sue them if they didn’t go away? These d-bags know that most people will just walk away. Or even if they do get called on it - most of the time the BAR doesn’t do anything about it!
Unless the services stopped and the recipient of retainer was overpaid, that’s when the fee becomes refundable (a retainer is treated as any other fee, i suppose, and one has a right for a claim if one overpaid, or no goods or services was rendered. As for ‘demand letters’ with a threat to sue if bills/fees remain unpaid, these are just part of the tactics that collectors use to put pressure… well, of course, they can be true to their words and ’sue’, after all they are lawyers. But this is how the system works - anywhere, everywhere…
Did anyone recognize where the Register found that picture? It was taken at a Charity Event for the homeless where that scumbag attorney donated tickets to the Angels Game.
I know cuz I was there. He seemed like a decent guy to me.
Also, I know the State Bar has said they are “going after,” all loan mod lawyers. Sounds like the banks found someone to stop all these “troublemakers.”
Why is it so difficult for you to look into anything? I interviewed Sean Rutledge last night. Here’s how you framed the complaint in your story:
“The notice accuses Rutledge of taking $1,750 from a homeowner in November 2008 but never making an effort to get his loan modified. After the client requested a refund, it took months to get his money back and the client had to first sign a document releasing Rutledge of all legal liabilities, according to the filing.”
Here are the facts of the matters:
1. The client in question called United in early December and retained the firm during the second week by authorizing an electronic check for $1750. His authorization was voice recorded.
2. That client called his bank and stopped payment on the check the following day.
3. The next day the client called United and apologized for stopping payment on the electronic check, stating that he did so because he became nervous about giving out his banking information. He stated that he wanted to retain the firm as agreed, but wanted pay the retainer using a cashier’s check.
4. United received the cashier’s check a couple of days before the Christmas holiday and it was deposited the day after Christmas. The bank held the check until it cleared the clearing house, as a result of the client having stopped payment on the previous payment. It cleared United’s account just before New Year’s.
5. On January 3rd, the client called United stating that he wanted his money back, as he had changed his mind once again. United asked that he send in the request in writing and they received that written request a few days later.
6. United then contacted the client and let him know that they were sending him a release of liability for him to sign before he could be issued a refund.
7. The release in question was a standard release of liability, downloaded from the Bar Association’s Website. It states that United would no longer be representing the client in question and would be released from any liability for acts that occurred after the date on which the form was signed.
8. Roughly a week later, the client called United and spoke with Sean Rutledge. He told Sean that he was going to complain to the State Bar Association because his electronic check had been deposited twice, after he had stopped payment the day after he wrote it. Sean explained that that was not due to anything United did. It was the normal practice of the clearing house to attempt to collect funds from an authorized electronic check twice.
9. The client started calling the law firm asking to speak with an attorney and asking questions about his home and the foreclosure process. United attorneys answered his questions.
10. The client called for Sean Rutledge on several occasions over a two week period of time, and was unable to reach Mr. Rutledge. Sean is the managing partner of United Law, a firm with offices in Irvine, on Wall St. in New York, and in Ft. Lauderdale, Florida, and as a result, Sean spends a great deal of time traveling.
11. In early February, Sean’s assistant came running into his office saying that the paramedics were on the phone and that his mother had been in a car accident. When he picked up the phone it was the client in question who had used the ruse to talk to Sean.
12. Sean informed the client that he was not to call his firm and lie about the nature of the call. He also told the client that United still had not received the signed released and that he would send another one, as he wanted it signed and returned so the firm could send the refund immediately.
13. It was 65 days after United first sent the client the release of liability, a standard form, and the client received the refund in the amount of $1750… 72 hours after United received the signed release.
14. When the California Bar Association began investigating the complaint made by the client, the client had received his full refund two months earlier.
And again, here’s how you, Matt Padilla, characterized the Bar’s filing of a disciplinary action against Sean Rutledge of United Law Group, Irvine.
“The notice accuses Rutledge of taking $1,750 from a homeowner in November 2008 but never making an effort to get his loan modified. After the client requested a refund, it took months to get his money back and the client had to first sign a document releasing Rutledge of all legal liabilities, according to the filing.”
I can tell you that Mr. Rutledge is deeply offended by the actions and statements of the California Bar Association. And in my opinion, you as a journalist, and one that refers to himself as “The Mortgage Insider,” are clearly anything but.
It took me 45 minutes to investigate the details of the disciplinary action involving Sean Rutledge. I suppose you are too busy to be bothered with the facts.
Signed… your friend and admirer…
The Rambling Attack Monger
I called United Law Group and asked to speak with Sean Rutledge before I wrote anything. I was told he was busy and left my name and phone number.
Later that day I got a call from a media rep for Sean. I told her why I was calling and gave her until the next day to get me a statement or interview with Sean.
I called the next day, still waiting, and was told Sean was out of town and would get a statement via email. That is all. I have still never heard directly from Sean. He has not bothered to call me back.
I published based on the State BAR complaint and the brief statement from Sean, which I posted in its entirety online.
It sounds like you spoke with him, good for you, and are publishing his version of events combined with select information from the complaint. The complaint says Sean’s law firm never attempted to get a modification and that he authorized a third party, not a law firm, to get confidential information from the client. I have already posted Sean’s statement.
You seem to have no concept for how journalism actually works. I hope this has helped your understanding.
And one last thing: Sean’s statement said he could not discuss a former client. But you are saying you interviewed Sean. So are you saying he discussed a former client with you?
There you are… nice to finally hear from you. Listen, while I’ve got your attention, and seeing as you are the mortgage writer in Orange County… why have you never bothered to cover the situation related to loan modifications in any reasonable way?
I know you think I’m some kind of shill for the loan modification firms, but it’s not true. I’m just someone who cares a great deal about homeowners losing their homes when they shouldn’t be.
Matt… this issue is being absolutely mangled by the press, you included. Have you ever tried to call a bank and get a mortgage modified? Have you called the government’s help line? The answer is no, you haven’t. I have, however. In fact, I’ve called banks at least 100 times, and I can’t even count how many times I’ve called the government’s help line.
Yet, you report on such things and give advice related to such things. Is that how journalism works?
Look, I’m sincerely bothered by the fact that people might actually listen to your advice about getting a mortgage modified, and I’m not the only one. I’ve received several emails today from others who read our exchange and another of your columns and expressed the same thoughts.
I’m also not saying that there aren’t scams out there, or that you shouldn’t go after them. In fact, I hate the idea of someone scamming a homeowner in distress over foreclosure, and I applaud yours or anyone else’s efforts to stop this from happening.
But we need accuracy, Matt. Real life experience and accuracy. We’ve had almost two years of misinformation and homeowners today are so confused they don’t know which way to turn.
As to Sean Rutledge, I’m sorry that he didn’t have time to return your calls, but it doesn’t surprise me. I don’t talk to people who don’t know what they’re talking about on a given subject either. I suppose I just have better access. I reached his office and he called me back right away. Go figure.
Why don’t you join me for an afternoon tour. Come see legitimate loan modification work being done by compliant firms that save homes every single day right here in OC. It’s important stuff, saving homes. And I’m not a bad person… some people even find me funny. I’ll drive, or I’ll ride with you… you can tell me about how journalism works on the way.
Heck… I’ll even buy lunch.
Martin,
We were clients of ULG. We had the same experience as Matt did and even made an appt to meet with him twice in person and he did not even show up!! And the worst part of this is I am losing my home, it’s going for Public auction in 2 weeks!!!! So how about if I buy you lunch?!
Martin:
Did you take any legal action against Sean Rutledge; or ULG? I am in the same predicament and I’m trying to help my parents make sense of the mess they got themselves into. Did you sign a dismissal of attorney or ask for your money to be refunded?
I am in the process I know other ppl who already took action but this company will not refund their money.
One thing people need to remember,
Lawyers don’t guarantee results. If the bank says no and the lawyer can’t change their mind, then so be it. But no one get’s their money back.
Everyone takes a risk.
Martin Andelman, before you attack Matt (oops, I guess that is too late considering what you’ve posted on your blog), you need to come clean on the modification company you promoted. The CA DRE later issued a Desist and Refrain Order against the company and filed an Accusation.
The company later closed its office, shut down its websites, and reopened another office under a new name. Their old number doesn’t appear to be forwarded, and I’ve called a number of times only to hear a message that the lines were busy. The new company also fails to provide compliance information on the website, and clients are beginning to voice complaints.
I discussed my compliance concerns about the company with you on more than a few occasions, and yet you continued to promote the company. Now, you refuse to report the facts.
If you really are concerned about homeowners, take some time off from hawking the mod firms, and man up.
Good work Matt.
For some reason Sean has been removed from the list of attorneys at United Law Group’s website. Looks like it’s bad publicity to have yourself listed on your own law firm website when you’re being investigated by the State Bar.