Reporter- Pacific Business News
Gov. Neil Abercrombie on Wednesday signed into law a bill that narrows the scope of attorneys who can act as ”distressed property consultants” and are exempt from Hawaii’s Mortgage Fraud Prevention Act, an effort that advocates say will add further protection to prevent homeowners from falling victim to mortgage rescue fraud.
The legislation stemmed, in part, from cases in which distressed home owners were bilked out of $1.5 million.
The bill is also in response to people who have tried to evade prosecution under the Mortgage Fraud Prevention Act, which regulates who can act as a consultant. Before the new law was signed, out-of-state attorneys were able to call themselves “distressed property consultants.“ and were exempt from the act.
House Bill 2275 says that only attorneys who are licensed to practice in Hawaii can be exempt from the strict regulations that the act dictates.
Under the act, people who act as consultants to stop foreclosure must provide a contract and cannot collect fees before the services are performed, among other things.
“This change will ensure that all attorneys performing distressed property consulting in Hawaii are subject to the Hawaii Rules of Professional Conduct and fall within the jurisdiction of Hawaii’s Office of the Disciplinary Counsel,” Bruce Kim, executive director of the state Department of Commerce and Consumer Affairs, said in written testimony.
Bill Cresenzo covers residential real estate and transportation issues for Pacific Business News.