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Commonwealth of Massachusetts

Public Reprimand No. 2005-2


Order (public reprimand) entered by the Board March 2, 2005.


On November 8, 2002, the respondent filed a voluntary Chapter 7 Bankruptcy Petition on behalf of a debtor. The respondent also filed a “Statement of Intention” indicating that the first mortgage held by the Massachusetts Housing Finance Agency (MHFA) on the home of the debtor would be affirmed and the home retained by the debtor.

On December 2, 2002, MHFA sent a reaffirmation agreement to the respondent. The reaffirmation agreement provided that $250 would be added to the debt payable to the lender for legal fees associated with preparing the agreement. The respondent considered the $250 fee to be inappropriate because the debtor was current in her mortgage payments at the time the bankruptcy petition was filed. Upon receipt of the reaffirmation agreement, the respondent did not obtain the debtor’s signature or advise the debtor of the proposed agreement or of the potential ramifications of not signing the agreement. The respondent also did not take any action in the bankruptcy court to challenge MHFA’s right to collect the $250 legal fee.

On February 5, 2003, MHFA filed a motion for relief from the automatic stay because the debtor had failed to execute the reaffirmation agreement. On February 7, 2003, after receiving a copy of MHFA’s motion, the debtor telephoned the respondent and inquired about the reaffirmation agreement. The respondent informed the debtor that he would "take care of it” and "correct the problem." On February 11, 2003, MHFA sent the respondent a new reaffirmation agreement, adding additional legal fees for a total of $625.

On February 13, 2003, the respondent filed an opposition to MHFA’s motion for relief from stay. The opposition argued that the claimed requirement to pay the lender a fee when the mortgage was current did not comport with case law.

The respondent then sent the debtor the first reaffirmation agreement for her signature. The respondent crossed out the fee of $250 before mailing the agreement to the debtor. On February 24, 2003, the debtor signed the reaffirmation agreement with the $250.00 fee crossed out and returned it to the respondent. The respondent did not advise the debtor of the potential consequences of signing the agreement with the fee crossed out.

On February 25, 2003, MHFA received a letter from the respondent proposing a settlement whereby the debtor would sign a reaffirmation agreement but pay no legal fees. In response, MHFA proposed that the debtor sign a reaffirmation agreement with the payment of one-half of the (by then) $1,200 in legal fees incurred to date. The respondent did not communicate this offer to the debtor.

On March 4, 2003, the Court entered an order allowing MHFA’s motion for relief from stay. The respondent sent a copy of the order to the debtor without a cover letter or explanation of the significance or of the potential consequences, including that MHFA might attempt to foreclose on the property.

On March 24, 2003, the respondent filed with the Court the reaffirmation agreement executed by the debtor with the $250 fee crossed out. On March 25, 2003, MHFA sent a letter to the respondent advising him that MHFA would not sign the reaffirmation agreement unless the legal fees and costs were paid. The respondent sent a copy of the letter from MHFA to the debtor without a cover letter or explanation of the significance or meaning of the letter.

On March 26, 2003, MHFA sent a “Notice of Default, Demand and Possible Acceleration of Mortgage” to the respondent. The respondent sent a copy of the notice to the debtor without any cover letter or explanation of the significance or meaning of the notice.

On April 18, 2003, the respondent sent a letter to MHFA enclosing the original signed reaffirmation agreement (with the fee of $250 crossed out) and indicating "we expect [MHFA] will execute the agreement and file it with the Court." The debtor received a copy of the letter from the respondent. On May 1, 2003, MHFA responded to the respondent’s letter and indicated that MHFA would not sign the reaffirmation agreement unless it made provision for all fees and costs. MHFA also told the respondent that foreclosure proceedings had commenced and that MHFA would entertain a repayment plan in exchange for forbearing from foreclosure. The respondent did not send a copy of this correspondence to the debtor or otherwise inform her that MHFA had commenced foreclosure proceedings due to her failure to execute a reaffirmation agreement agreeing to the payment of legal fees.

On May 2, 2003, the debtor received a letter from MHFA notifying her that her loan was being transferred to their foreclosure department. On May 5, 2003, the debtor called MHFA and was informed that MHFA’s legal fees were now $5,400 and that the property was in foreclosure. This was the first time that the debtor understood that the failure to pay the fees demanded by MHFA might result in foreclosure. On May 5, 2003, MHFA filed a complaint to foreclose on the debtor's residence.

On May 6, 2003, the Court struck the reaffirmation agreement filed by the respondent on March 24, 2003, “because the agreement was not signed by the creditor.”

On May 19, 2003, MHFA mailed an updated reaffirmation agreement to the respondent and stated that the amount of legal fees necessary to bring the account current was $7,337.32. The letter also informed the respondent that foreclosure proceedings were ongoing. By letter to MHFA dated May 22, 2003, a copy of which was sent to the debtor, the respondent again argued that the assessment of fees was improper and offered to resolve the matter by payment of $1,000. MHFA rejected the respondent’s offer.

On May 30, 2003, the debtor wrote to the respondent and demanded that the matter be resolved and the fees paid. The respondent did not respond to this letter.

By letter dated June 5, 2003, MHFA advised the respondent that two monthly mortgage checks from the debtor would not be accepted because the loan was in foreclosure. The checks were sent to the respondent. The respondent failed to inform the debtor that MHFA had returned her uncashed payment checks.

In early June of 2003, the debtor and the respondent met. On June 13, 2003, at the respondent’s suggestions, the debtor retained new counsel.

On September 19, 2003, the U.S. Trustee filed a “Motion for Order Requiring Debtor's Counsel to Disgorge Fees or, in the Alternative, for Order Requiring Debtor's Counsel to File Fee Application.” The motion was based in part on the allegation that the respondent had not adequately communicated with the debtor regarding the potential risks of not signing the reaffirmation agreement.

On January 7, 2004, the matter of MHFA’a entitlement to legal fees was settled and the respondent paid $11,000.00 of his own funds to MHFA. The respondent’s legal fees of $850.00 for handling the bankruptcy were disgorged, the debtor’s mortgage was reinstated, and late fees and interest were waived.

The respondent’s failure to fully explain to his client the risks of failing to pay the legal fee allegedly due for preparation of the reaffirmation agreement, including the risk of escalating fees and costs and the threat of foreclosure, and the respondent’s failure to keep his client reasonably informed of the status of foreclosure proceedings, of MHFA’s refusal to accept mortgage payments and of MHFA’s offer of compromise, is conduct in violation of Mass. R. Prof. C. 1.2 and 1.4. The respondent’s failure to either recommend to his client that she pay the legal fee demanded, or to diligently challenge the imposition of the fee in the bankruptcy court, was conduct in violation of Mass. R. Prof. C. 1.3.

This matter came before the Board on a stipulation of facts and disciplinary violations and a joint recommendation for discipline by public reprimand. On February 14, 2005, the Board of Bar Overseers voted to adopt the parties’ stipulation and to impose a public reprimand.

1 Compiled by the Board of Bar Overseers based on the record of proceedings before the Board.

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