2015 Formal Ethics Opinion 2: Preparing Waiver of Right to Notice of Foreclosure for Unrepresented Borrower
View the Formal Ethics Opinion in Full Here
The Formal Ethics Opinion 2015 FEO 2 rules that when the original debt of an unrepresented borrower, owner, or guarantor is over $100,000, a lawyer for a lender may prepare and provide a waiver of the right to notice of foreclosure and the right to a foreclosure hearing pursuant to N.C. Gen. Stat. § 45-21.16(f) so long as the lawyer explains that his role and does not give legal advice to any unrepresented person. It should be noted that a lawyer cannot prepare such a waiver if the waiver is part of a loan modification package for the security of a mortgage by the primary residence of the borrower.
A lawyer may represent the lender on a debt of more than $100,000 and draft a waiver under N.C. Gen. Stat. § 45-21.16(f) and provide the waiver form to unrepresented Notice Parties for execution as long as the lawyer complies with the requirements of the statute and Rule 4.3 in dealing with unrepresented persons. The Ethics committee compares the waiver to a deed or confession of judgment since it’s prepared to accommodate the needs of the lawyer’s client and usually prepared in conjunction with negotiations between the lender and borrower in an attempt to avoid consequences of default.
If the waiver is executed in conjunction with other lender prepared documents, such as forbearance agreements, modification agreements, or reinstatement agreements, it makes no difference on whether a lawyer may represent the lender. This is all contingent on the lawyer explaining that he represents an adverse party and following the requirements of Rule 4.3.