Servicing Attorneys Need to Improve Practices

For mortgage firms that institute foreclosure actions, the key to a successful outcome is in the lawyer selected, according to speakers at the MBA's national servicing conference in San Diego. Executives participating on the judicial activism panel at the trade show said it is important to choose a lawyer who knows how to cut their losses while providing advise on whether the servicer is facing a bad case, especially with so many "foreclosure factory cases" swamping the industry. Speakers worried about uncommunicative attorneys on both sides of the equation especially in regard to requests for information. Judge Ronald Pearson, who works bankruptcy cases in the Southern District of West Virginia, advised servicers to look for attorneys who are available and proactive about workouts. "I see situations most often where the borrower appears in court and the attorney for the lender is not there," he said. "The borrower says he has been calling the lender and getting no response. They bring in returned checks," said Judge Pearson. "If you hire a lawyer to commence legal action, he better have the time to call the borrower who is there." Older borrowers around the country are making appearances in court, he said, sharing stories of how their homes were almost paid for when someone made a telephone call and asked the borrowers to refinance. The refi turned out to be a teaser interest rate with payments that doubled after a three-year period. "If a borrower can prove that and show how they can't make the payment, you are in trouble," said Judge Pearson. "I have yet to see the servicer bring a loan originator to court to counter the elderly debtor's testimony." On the other hand, Cynthia Nierer, a partner with Rosicki, Rosicki & Associates, said there are plenty of borrowers who get "busted" for making claims that they tried to contact their servicer. Many times, they did not make the calls they claimed, she said, and in some cases the judges recognize that argument.