Washington law firms are seeing an uptick in work thanks to the recent furor over mortgage companies’ foreclosure practices. And they’re not expecting it to drop off anytime soon.
To keep up with demand, K&L Gates has launched a U.S. foreclosure task force designed to aid clients in addressing questions related to potential lawsuits, hearings and foreclosure moratoriums.
Laurence Platt, a mortgage banking partner in the firm’s Washington office and a leader of K&L Gates’ financial services practice, wouldn’t comment on specific clients the firm is representing, but he said they include national banks, loan servicers, and other public companies. K&L Gates also recently served as examiner in the New Century and WorldCom bankruptcy proceedings.
Platt said that foreclosure mishaps have become a primary focus of the Justice Department, Congress, state attorneys general and consumer advocacy groups, which has prompted clients to reach out to firms with questions about what all of the furor means to their businesses.
“The thing about reviewing foreclosure practices is that those practices aren’t the end of it. There are a lot of spillover consequences,” Platt said. He said those can include questions of whether a given practice is lawful or whether it raises the specter of “unsafe and unsound” banking practices.
K&L Gates’ foreclosure task force, Platt said, will bring together about 10 lawyers from a range of practices that might be able to offer clients advice on the ongoing foreclosure debacle. He said that the team will advise clients on complying with state servicing laws; initiating and conducting internal investigations; defending lenders and loan servicers in federal and state government enforcement actions, class actions, loan-level litigation, and commercial disputes; providing electronic discovery services; and serving as a policy and government affairs counselor before Congress, executive agencies, and state equivalents.
“The hysteria clients have seen coming from regulators and from state attorneys general over this foreclosure mess has left them shell-shocked,” Platt said. ‘They’re not all Snidely Whiplash. They’re trying to figure out where they go from here.”
K&L Gates isn’the only firm seeing an uptick in work thanks to the foreclosure mess. Andrew Sandler, a name partner at BuckleySandler said that his firm has about 70 lawyers working on foreclosure matters. “That’s more lawyers than we’ve ever had working on a single issue,” Sandler said.
While Sandler also wouldn’t comment on the firm’s clients, The National Law Journal has previously reported that BuckleySandler represents Wells Fargo, Bank of America Corp., American Express Co., The Royal Bank of Scotland Group PLC and Morgan Stanley. (Bank of America announced today that it would begin resubmitting paperwork on Oct. 25 to restart foreclosures on borrowers who missed their payments in 23 states.)
Sandler said that there has been a “barrage” of regulatory inquiries into the firm’s clients’ foreclosure practices. “Clients are very frustrated because there seems to be a fundamental misunderstanding that these questions of technical issues, such as robo-signing, etc., don’t address the real question—whether these foreclosures were valid,” Sandler said. He said many of the foreclosures that were conducted involved borrowers who were in default.
He said that because the allegedly improper foreclosures have affected every state in the country, advising clients on their foreclosure practices has to take into account the differences in law among the 50 states. “This is really taking a full 50-state analysis,” Sandler said.
He added that it appears the work will continue foreseeable future. looks like the work won’t be going away any time soon, he added. “Investigations are always a prelude to litigation. And there have been a whole lot of investigations,” he said.