California Attorney Slammed With State Bar Discipline For Attempting To Circumvent Loan Modification Rules Prohibiting Collection Of Upfront Fees By Unbundling Services, Then Clipping Clients For Cash As Each Service Was Performed
The June 2013 issue of the California Bar Journal announced the discipline handed out to a California attorney for pocketing upfront fees for loan modifications under the mistaken belief that the statute can be circumvented by unbundling his services, then charging for each service as it is provided:
- SWAZI ELKANZI TAYLOR [#237093], 34, of Beverly Hills, was suspended for two years, stayed, placed on two years of probation with an actual six-month suspension and was ordered to take the MPRE and pay restitution. The order took effect March 29, 2013.
Taylor committed nine counts of misconduct in eight client matters involving loan modifications. Eight of the counts of misconduct involved charging pre-performance fees for loan modifications. Civil Code Section 2944.7 prohibits the collection of any fees until all loan services are performed.
Taylor believed he could unbundle the fees for his legal advice and real estate consulting services, charging separately when each service was performed, but the court rejected that argument. Taylor was also found to have failed to provide a client with a separate statement about the lack of necessity for a third-party negotiator. He was ordered to pay $14,350 in restitution, plus interest, to his former clients.