Special Report: Legal Services
The economy is getting stronger and the delinquency rate has edged down on home loans, but the pace of foreclosure starts remains near a record high, according to the MBA's quarterly delinquency survey. And consumer bankruptcies also remain elevated. What does that mean for mortgage servicers? It means you probably still have to call up those lawyers in your Rolodex more often than you'd like.
Lenders rely on legal counsel for a variety of reasons, but none more frequently than for cases of serious delinquency, default, foreclosure or bankruptcy. For that reason, both the law firms and vendors that provide legal services to the mortgage banking industry and lenders themselves spend a lot of time trying to figure out how they can make the process easier and quicker.
It almost goes without saying that legal and regulatory compliance in the collections and default management field are more important today than ever before. Class-action lawsuits against prominent servicers of lower-credit quality mortgage loans have highlighted the risk of straying outside the bounds of what is required by federal and local laws or loan documents. And the problem is not limited to the subprime sector.
Servicers focusing on A-paper and conforming loans also run the risk of litigation if they aren't careful.
Technology can help improve efficiency, but the bottom line is that servicers need top-notch legal expertise to navigate an increasingly complicated regulatory landscape.
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