Editor’s Note: An earlier version of this article wrongly described Brandon Hintz, a partner with the United Foreclosure Attorney Network, as a 29-year-old Sacramento man who had graduated from Christian Brothers High School, Sierra College and Lincoln Law School, and was admitted to the State Bar on June 4, 2013. That is not the same Brandon Hintz named in the State Bar’s complaint. The Bee apologizes and regrets the error. Corrected on Dec. 1, 2013.
Less than 3½ years after her admission to the State Bar, Kristin Lynn Day of Roseville will soon join 57 other attorneys who have lost their California law license for engaging in foreclosure rescue schemes.
Also known as “loan modification” scams, they are among the multitude of creative swindles that grew out of a recession that ravaged the residential housing market.
Bar Court papers say that Day was among the predators who brought false hope to desperate homeowners upside down on their mortgage loans or already caught up in foreclosure. The attorneys extracted advance fees, filed lawsuits doomed to failure, and walked away. Day’s advance retainer fees ranged from $3,500 to $6,000.
Meanwhile, the owners’ nightmares about losing their homes became all too real.
Day, who now lives in Indiana, said in a telephone interview that some of the bar’s accusations are not true, but she acknowledged making some mistakes due to her inexperience.
“I was young and naive and got in over my head,” she said.
Bar Court papers claim that in February 2011 Day, then 32 and less than two years out of Indiana University’s School of Law, formed a partnership with Brandon Hintz called United Foreclosure Attorney Network. It offered representation in mortgage litigation and other debt-related matters.
Day split her retainers with Hintz, even though she knew he was not a lawyer, the papers say.
In 2009, regulators had ordered Hintz to cease working as a real estate broker or salesperson in California without a license.
Two years later, while he was Day’s partner in United Foreclosure Attorney Network (UFAN), the state of Washington found that Hintz was conducting business there as a mortgage broker for residential properties without a license. He was operating through a company that had the same Roseville address as UFAN.
Hintz was barred for five years from participation in Washington in “the affairs of any mortgage broker,” ordered to pay a $10,000 fine, restitution of $5,370 to a borrower and a $768 investigation fee.
Other records of the Washington Division of Consumer Services accuse Hintz of operating in that state as an unlicensed loan originator as far back as 2008.
Day last month agreed to be disbarred after admitting 10 counts of misconduct, including aiding in the unauthorized practice of law, sharing fees with non-lawyers, incompetence, failing to return unearned fees, collecting an illegal fee and moral turpitude. She will be ordered to pay $41,578 plus interest in restitution.
Day said she accepted the disbarment even though the bar papers “have a lot of erroneous information in them.” Specifically, she denied splitting fees with Hintz, who she said was an employee and not a partner.
But by the time she was asked to sign a stipulation agreeing to the papers’ contents, she said, she had moved back to her native Indiana to care for her father, who has leukemia.
“I was told by an attorney for the bar that if I didn’t sign, it would go to trial,” she said. “I didn’t have the resources and was not in a position to fight it from here.”
She is charged with scamming eight clients, but admitted using the same tactics to cheat approximately 200 clients, according to State Bar Court papers.
Only the California Supreme Court’s approval of the disbarment remains.
She admitted signing at least 30 contracts with “legal assistants” who solicited and signed up clients and engaged in the unauthorized practice of law by conducting initial client consultations, making determinations on whether to accept retainers, and providing legal advice – all without Day’s supervision, the papers say.
They say Day “did not perform any legal services of value on behalf of any of UFAN’s clients.”
For example, they allege, Angilberto Salazar paid advance fees of $5,000 to cover the cost of initiating a lawsuit and $1,000 for UFAN’s “foreclosure protection plan,” which Day represented would deny his lender the ability to foreclose on his home. Of the advance fees, Day retained $1,425 and remitted $3,575 to a company called Mitigation Professionals LLC, which supervised and paid the legal assistants between $1,500 and $2,800 for each new client.
Despite Day’s promise, the home was lost to foreclosure.
She “knew or was grossly negligent in not knowing that the misrepresentations she made to Mr. Salazar regarding UFAN’s foreclosure protection plan was a false statement,” the bar papers say. In making such a statement to Salazar and others, Day “willfully committed acts involving moral turpitude, dishonesty or corruption, in willful violation of (the) Business and Professions Code.”
Many of the homeowners who sought Day’s help to save their homes were already in foreclosure or had tried to alter the terms of their loans and had been turned down. Working from a script, the legal assistants claimed litigation could hold off foreclosure or reverse a sale and assured prospective clients it offered the best chance to reduce their payments. The Day-Hintz partnership remitted 60 percent to 70 percent of the advance fees to Mitigation Professionals.
In just a 2½-month period, from the end of May 2011 through mid-August 2011, UFAN paid Mitigation Professionals more than $378,000 out of advance fees deposited into Day’s “general operating account,” State Bar papers allege.
The now-defunct Mitigation Professionals was a Newport Beach-based company owned and operated by Glen Reneau, an Orange County wheeler-dealer. Reneau, 37, and his company, along with others, were targeted in a lawsuit filed by the state in August 2011 and aimed at a loan-modification racket. Mitigation Professionals and other defendants were shut down by a court-appointed receiver. The practices of attorneys who were defendants were taken over by the State Bar.
The defendants “fraudulently promised to win prompt mortgage relief for millions of vulnerable homeowners across the country,” according to state Attorney General Kamala Harris. “Innocent people, already battered by the housing crisis, were (victimized) ... in their moment of distress.”
Hintz and Reneau could not be reached for comment.
State Bar data show that between February 2009 – when the bar recognized the problem had reached epidemic proportions and began tracking its practitioners – and Oct. 31, its office of chief trial counsel received 13,200 complaints based on foreclosure rescue frauds, 10,210 of which proceeded to the investigation stage.
The bar has pursued formal charges in approximately 1,654 cases, involving roughly 211 attorneys licensed by California. Of those cases, approximately 1,225 have resulted in some degree of discipline imposed on 165 attorneys. Approximately 393 cases, involving 50 attorneys licensed by the state, are currently pending before the State Bar Court, with an additional 208 involving 86 attorneys under investigation.