ABA Says Proposed FTC Rule on Mortgage Relief Over-Regulates Attorneys
Already in the forefront of efforts to quash a so-called Red Flags Rule promulgated by the Federal Trade Commission concerning identity theft issues, the American Bar Association is now raising the alarm about another proposed FTC rule that would impact practicing lawyers.
The “Mortgage Assistance Relief Services” rule again so broadly defines those to whom it applies that it would put the federal government in an oversight role concerning related legal services, according to an ABA press release (PDF). That would undermine the traditional authority of state courts to regulate the legal profession and infringe on attorney-client confidentiality, the ABA contends.
It appears that a number of practitioners could fall within the definition of “mortgage assistance relief service provider” and, if so, they will face onerous record-keeping requirements as well as restrictions on certain representations, fee-collection and client confidentiality. At least some of these restrictions appear to violate the ABA Model Rules of Professional Conduct, according to the release.
It filed a letter (PDF) with the FTC on March 29 outlining its objections to proposed Rule No. R911003 and is urging the federal agency to modify it.
Although there currently are attorney exemptions in the rule, they are too narrow, the ABA says. It proposes that new language be included in the rule stating: “A licensed attorney engaged in the practice of law and those individuals acting under the direction of the attorney are exempt from this rule.”
Earlier related coverage:
ABAJournal.com: “FTC to Appeal Judge’s Decision That ‘Red Flags’ Rule Doesn’t Apply to Lawyers”
ABAJournal.com: “Mortgage-Rescue Meltdown: Calif. Probes 400 Lawyers, Fields 30 Complaints Daily”
Federal Trade Commission: “FTC Proposes Rule That Would Bar Mortgage Relief Companies From Charging Up-Front Fees”
