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THE A D V O C A C Y ISSUE WITH SPECIAL CONTENT FROM WOMEN IN LEGAL LEADERSHIP T H E G A P : E Q U A L PA Y PA I D FA M I LY L E A V E INTERVIEW: INGRID BECKLES COST OF COMPLIANCE L AW FIRM VI ABILIT Y R E G U L AT O R Y B U R D E N


Member Spotlight

Letter From Our Guest Editor PA G E 4

More Will, More Power PA G E 5

On the Books PA G E 3 6

PA G E 6

In the Trenches with Ingrid A C O N V E R S AT I O N F R O M WILLPOWER

PA G E 3 4

PA G E 1 4

Paid Leave C A N YO U N G M OT H E R S H AVE IT ALL?


Advocacy Day Briefing Materials Cost of Compliance

PA G E 1 8

Women in Washington

PA G E 2 4

Law Firm Viability PA G E 2 6

Regulation of the Practice of Law PA G E 2 8

Yes, Gaps

Matter.

PA G E 1 0

S TAT E S N A P S H OT

Maryland Zombie Debt Collection PA G E 3 2

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The Hook LESSONS FROM THE ROAD


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Women, Advocacy and the Power to Play On April 18th, in conjunction with Advocacy Day, we held our first ALFN WILLPOWER Summit in Washington, D.C. We started the day off with a member meeting, where the group leaders introduced themselves and provided insight on balancing our work and home lives. In other words, “how we do it all.” We hit on the fact that we can’t, so we don’t! We make decisions based on our values and then we put ourselves wholeheartedly into the things we do. WILLPOWER continued with Natalie Grigg interviewing Ingrid Beckles, Founder and President of the Beckles Collective on her experiences while Senior Vice President and Head of Default Asset Management at Freddie Mac during the housing crisis. Ingrid provided insight on hitting the glass ceiling both financially and in her position. Read more on this interview in the article “In the Trenches with Ingrid”, by WILL Member Jacqueline Comeau. Next up, associate member Debbie Foster led the panel of Candice Archibald, Assistant Vice President at M&T Bank, and Kathy Rentas, Associate General Counsel at Fannie Mae, and attorney members Kris Murtha and Marci Ford on “Subverting the System.” They opened with a discussion of the discrimination women have faced in pay, gender, age, and race, and how we can narrow the gap. That session was followed by attorney and ALFN Board Member Andrea Tromberg moderating a panel that included special guest speaker Laurie Maggiano, Mortgage Servicing Manager at the Consumer Federal Protection Bureau (CFPB), with Alicia Wood, Assistant Vice President over Foreclosure at Ditech Financial, LLC, and attorney members Amanda Green and Caren Castle on titled “Ages and Stages”. We were honored to have Linda Klein, President Elect of the American Bar Association (ABA), speak during a Special Keynote Luncheon on ABA initiatives targeting women, children, and other minorities who need support. The Power of the Purse initiative advises house counsel on ways their economic influence to improve diversity. The Grit Toolkit provides materials that can be useful to producing a “grit and perseverance” mindset in your organization. There is an ABA Program on Gender Equality and Partner Compensation and the ABA Study “Closing the Gap” can help us to better understand the gender gap. WILLPower concluded that afternoon with two closing sessions. First, attorney member Diane Rosenberg led a discussion with Sharron Levine and Stuart Ishimaru of the Offices of Minority and Women Inclusion (OMWI) at the Federal Housing Finance Agency and CFPB, respectively. They spoke about the progress OMWI has made over the last few years researching diversity inclusion and developing equal opportunity employment standards. And finally, Cindy Miller, former LPGA Professional Golfer, spoke on finding your “it,” otherwise known as your purpose, how not to miss “it,” and how not to lose “it.” All in all, the WILLPower Summit was a huge success and we cannot wait to start planning next year’s event! ERICA FUJIMOTO, SPECIAL GUEST EDITOR, ANGLE & WILLED DIRECTOR OF DEFAULT SERVICES, AFFINITY CONSULTING GROUP CONTACT ERICA AT EFUJIMOTO@AFFINITYCONSULTING.COM


Basic Math: More Will Equals More Power ANDREA TROMBERG, MANAGING PARTNER, GLADSTONE LAW GROUP NON-AFFILIATED SEAT, ALFN BOARD OF DIRECTORS CONTACT ANDREA AT ATROMBERG@GLADSTONELAWGROUP.COM A person walks into the boardroom, good looking, commanding attention, a leader in the company, among the most highly compensated of the executives, competitive, and extremely successful. If you have assumed this is a description of a male, you have demonstrated the importance of WILL and the need for the advocacy on behalf of women in our industry. Wikipedia defines “advocacy” as “an activity by an individual or group which aims to influence decisions within political, economic, and social systems and institutions.” Merriam-Webster’s Dictionary defines advocacy as “the act or process of supporting a cause or proposal.” So, what is WILL aiming to influence or proposing to achieve? As a mission, WILL has set out to achieve the goals of creating a forum for women in the industry, and cultivate leaders within their organizations, the WILL membership, and beyond. To guide members through these objectives, WILL has created four pillars, Mentorship, Advocacy, Leadership, and Balance. Using these pillars as a guide, the members focus on mentoring other women on decisions within their lives, to advocating for fair treatment, promoting leadership roles held by women, while helping women to learn to maintain a life balance between family, work, relationships, and their own personal needs.

Leadership in the industry is another way to illustrate the accomplishments and significance of women in the industry. ALFN has two sitting board members that are women. NARCA’s past president is a woman and its current board has four female members. The CEO, Senior Vice President, and eight Vice Presidents of the MBA are all women.

Now that we know the purpose of WILL, we can work to influence decisions within the political, economic, and social systems that will allow the group to reach these goals. WILL strives to advocate for these goals through education, demonstration, and leadership. In order to educate and demonstrate the power of women in the industry you must know your facts. Did you know that 60% of the representatives from servicers that attend ALFN events are women? Did you know that women make up a large percentage of the attorneys and staff in the servicing and creditor law firms—62% in fact, as self-reported by ALFN members. Yet, women make up a very small percentage of the leaders in law firms, servicers, and in organizations such as ALFN. Women play a valuable role in our industry, and pointing this out is important not only to highlighting the talent and ability of women in servicing, law, and related vendors, but to advocating for them to have the courage to step up and get involved and to achieve positions of power and influence in their companies. Leadership in the industry is another way to illustrate the accomplishments and significance of women in the industry. ALFN has two sitting board members that are women. NARCA’s past president is a woman and its current board has four female members. The CEO, Senior Vice President, and eight Vice Presidents of the MBA are all women. So, how can you get involved and advocate for WILL? Start by telling stories of your successes. Share your personal accomplishments as a woman in the industry within your company, with your peers, and with those in Washington, D.C. Be a leader by volunteering for boards and leadership positions at your business and within your member associations. Demonstrate the strength of women by raising awareness as to women’s issues. You are not alone. Share your stories and do not tolerate the lack of equal or fair promotion of women at the workplace, or policies that further improper treatment of women. Through advocacy, together we WILL make a difference.


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#WILLPOWER

Yes, Gaps Matter BY WENDY WALTER, ESQ. PARTNER, MCCARTHY & HOLTHUS WWALTER@MCCARTHYHOLTHUS.COM


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he wage gap between women and men has received a lot of attention lately. This article will discuss some of the potential causes of this gap, the employer’s dilemma in the modern workplace and provide some salary negotiation techniques. Resting on a statistic isn’t enough: real change comes from our own actions and reactions in the salary negotiation conversation. So let’s begin.

and managers who can negotiate to get resources at the lowest price are just doing their jobs. They will do what it takes to keep top talent engaged, loyal, and motivated to continue driving their business. The personality of the employee in the compensation discussion will be a factor for determining the outcome. Whether you are a woman or

Why are there women making 72% of their male counterparts?1 In the course of my 14 year career in mortgage default law firms and in mortgage servicing, I’ve been on both sides of the table negotiating salary and compensation. I’ve had the privilege of viewing this conversation in over 17 different states with professionals from all sides of the country, and the outcome doesn’t depend on the employer’s discrimination against the employee or the employee’s gender. Discrimination might actually be a minor cause because of the progress that’s been made with women and numbers in the workplace, laws prohibiting such discrimination, and more awareness in the modern workplace.2 A big factor is the actual salary negotiation itself and the variables going into that process. In my experience, the better negotiator does better in the long run. Consider the employee who never asks for more. They are paid the amount that was offered, they don’t ask for more, they don’t know the market for their talents and when the yearly review and compensation cycle is upon them, they don’t engage in the conversation. Instead they allow the process to sweep over them. Employers need to retain professionals who help drive their business, while employing resources that cost them the least in order to make profit. That isn’t a surprise, that’s simply capitalism, and owners 1 Forget for a minute the controversy surrounding the method used for arriving at the 72% calculation. See Bryant, Charles and Clark, Josh. Audio Blog Post. “How the Gender Pay Gap Works.” Stuff You Should Know About, April 12, 2016. http://www.stuffyoushouldknow.com/podcasts/how-the-gender-pay-gap-works/ 2 Dubner, Stephen. Audio Blog Post. “The True Story of the Gender Pay Gap.” Freakenomics, January 7, 2016. http://freakonomics.com/ podcast/the-true-story-of-the-gender-pay-gap-anew-freakonomics-radio-podcast/

a man, if you don’t negotiate, you are going to make less than your co-workers who engage in effective salary discussions... So what can you do to help close the gap? First, you need to understand the personalities driving compensation decisions. What’s important to your current or prospective manager? Is it the employee who spends hours organizing their files and keeping them


pristine, but isn’t moving the file forward or achieving a milestone or billing target? Or is the employer placing more value on the team member who has technical skills in the case management or vendor management system? The priorities of the company will often dictate which positions are rewarded more in terms of compensation. Consider your performance review ratings; the amount of time you have spent in your position, in the company, in the industry; your relative dispensability and the difficulty to train a new hire to complete your duties at a level required by your company’s clients or investors; and other factors that matter to the employer. Second, you need to understand the marketplace for your profession. I’m not saying you need to ask everyone how much they make and stir up a bunch of drama at the office.3 Quiet polls for industry colleagues or friends might be helpful for understanding your value. Inquiring on salary scales for similar positions in other firms or departments might also help provide the information that’s necessary to determine if a gap even exists in your situation. Third and finally, you need to engage in active negotiation. Negotiation in this context is not a zero-sum game. During the WILLPower Summit, interviewee Ingrid Beckles said it best when she advised everyone to “tell your story in a manner people can hear you.” What matters is 1) what the company needs 2) what you bring to the company and 3) what amount will be sustainable for both sides. If you are shooting for the moon, but you aren’t willing to step up in terms of your position, your time, or your scope of responsibility don’t be surprised if you don’t get what you ask for or if you don’t get a raise at all. Also realize that negotiations will not always yield a significantly higher salary, but they can get you other benefits – the flex time you need to be a caregiver 3 NPR Planet Money Podcast Episode: 550 “When Salaries Aren’t Secret.” July 2, 2014. http://www.npr.org/ sections/money/2014/07/02/327289264/ episode-550-when-salaries-arent-secret for a discussion about a reality tv show in the UK where salaries were revealed forever changing the workplace culture.

MIND THE GAP

BY DENISE CARLON, ESQ., KML LAW GROUP, DCARLON@KMLLAWGROUP.COM The Equal Pay Act, passed in 1963, aimed to close the gap in salaries earned by men and women who held the same job for the same employer. At the time, women were earning fifty-nine cents for every dollar earned by men. Despite the law’s passage over fifty years ago, there remains a sizeable pay gap between men and women. A woman currently earns seventy-nine cents to a man’s dollar, a twenty-one cent gap. THE GENDER PAY GAP: A 2016 HOT-BUTTON ISSUE On April 1, 2016, five members of the U.S. women’s national soccer team filed a complaint against the U.S. Soccer organization alleging violations of the Equal Pay Act. The women’s team is coming off a successful year highlighted by their 2015 World Cup Championship, sold-out events, and endorsement deals. Yet the compensation they receive is considerably less than the men’s team. The detailed complaint sets forth their pay structure in comparison to the men who play for the U.S. men’s national soccer team. The women allege that the average pay for a male player is $406,000 annually, while the average female player is paid only $72,000 annually by U.S. Soccer. With the women’s success on the soccer pitch and in the profits column, it is hard to believe that in 2016 their pay is so significantly less than their male counterparts. April 12, 2016, marked Equal Pay Day 2016. The “un-holiday,” established in 1996 by the National Committee on Pay Equality, commemorates how far into the year women must work to earn what men earned in the previous year. The purpose of marking this date annually is to bring awareness to the issue of pay equality. The day often fosters lively discussion across news and social media regarding wage-gap statistics and the possible reasons behind the disparity. Further, 2016 is a presidential election year that has featured numerous intraparty debates

and prominent female candidates. The Democratic debates feature Hillary Clinton, while in the early stages of the race, the Republicans heard from Carly Fiorina. With two prominent females running for the nation’s highest office, the gender pay gap has been a hot-button issue for supporters of both political parties. Despite the recent attention, the gender wage gap has only decreased by twenty cents – less than half a penny per year since the enactment of the Equal Pay Act. And it appears that progress is stalling. GAUGING THE GAP ACROSS DEMOGRAPHICS The question of equal pay is much more complicated than “same job, same employer means equal pay.” Studies have shown that when women enter into a male-dominated field in large numbers, average salaries decrease for all.1 Further complicating the issue is the choice many women make to “lean in” to their jobs, or step back to focus on family. Gender pay disparity is also a function of race, age, and geography. There are factors that increase the gap dramatically, while some surprisingly have little effect on the gap. • Minority females face a much larger pay differential than females as a whole. Hispanic and African American women earn 54% and 63% respectively of what white men earn. • Older females earn less compared to their male counterparts of similar age. While wages generally increase for both men and women with age, the gap is widest between men and women ages 55-64, with women earning 76% of men’s median income. • State of residence also has an effect on the wage gap. Women in New York earn 80% of what men earn, while women in Louisiana earn only 65% of their male counterparts’ annual wages.2 1 http://www.nytimes.com/2016/03/20/ upshot/as-women-take-over-a-male-dominatedfield-the-pay-drops.html?_r=0 2 http://www.aauw.org/research/thesimple-truth-about-the-gender-pay-gap/


Surprisingly, one factor that has little effect on the gender pay gap is that of education. A 2011 study by Georgetown University revealed that women need to earn a doctoral degree to average the same salary over a lifetime as men who hold a bachelor’s degree.3 MIND THE GAP If higher education is not the panacea, what can be done? One way women can help themselves is to enhance their salary discussions with their employers. There are seminars offered by various organizations including the American Association of University Women, colleges and universities, and local governments aimed at teaching successful salary negotiating tactics. Another important tactic women can use is simply communication. Speaking with a supervisor, or potential supervisor, regarding salary expectations can pay off over the course of a career. Employers also need to be mindful of the wage gap. Companies can conduct salary audits to ensure equal pay. We had the pleasure of hearing all-star panelists discuss the issue at the 2016 WILLPower Summit. Women from across the industry shared insights on how they worked to ensure equal pay and gender equality at their respective workplaces, including mentoring opportunities, discussions with other members of management, and a commitment to fairness and equality. Though the discussion of equal pay has been in the spotlight this year, the wage gap has held steady in recent years. Pay disparity between the genders is an issue that will not be solved in the short term. Working on closing the gap is going to require work on the part of employees, employers, and policy makers. Continuing the dialogue regarding pay disparity between men and women, across race and age, will be an essential part of attaining pay equality. As members of WILL, let’s continue to work together to answer the call. 3 https://cew.georgetown.edu/wp-content/uploads/2014/11/collegepayoff-summary. pdf

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or to give you more valuable personal time, more paid vacation time, company reimbursement for expenses such as cellular service or wifi, a certain number of work from home days a week, etc. It isn’t always about money, but when you negotiate effectively and do the work to back it up, you will be able to improve your situation. The worst thing that can happen is your employer will offer less or say no, but if you don’t step outside of your comfort zone and ask, you will never

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know. Closing the gap isn’t going to happen overnight, but by taking ownership you might make a difference in your career and in your business. Women in mortgage servicing have a big advantage over our peers in technology, science, and other industries. We have numbers. The wage disparities in industries like tech are far worse than in our space. Let’s continue to do good work, have rational conversations, and provide the best service to our customers and our industry. The gap is closing one negotiation at a time.


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In the Trenches with Ingrid A Conversation From Willpower Jacqueline M. Comeau, Director of Compliance The LOGS Group | JComeau@lOGS.com

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n April 18th, 2016, over 100 women convened in Washington, D.C., to participate in the ALFN’s first annual WillPower Summit. The inaugural event was charged with energy as women leaders came together to share personal insights, experiences, and lessons learned while climbing the ladder of success. One of the highlights of the day was a kickoff interview with Ingrid Beckles. Beckles is Founder and CEO of The Beckles Collective, a Washington, D.C., based executive consulting firm. Recently, she was recognized by Diversity Journal as one of the top women worth

watching. She is also the former Senior Vice President and Head of Default Asset Management for Freddie Mac and was in this role throughout the mortgage crisis. Beckles has accumulated over 20 years of diverse experience in the mortgage servicing industry, including a number of years at the executive level. With energy, grace, and a little bit of humor, Beckles shared knowledge and valuable tips that professionals in any industry can apply in their day to day lives to enhance their career growth. Below are a few key points for those who were not able to attend the summit.

CONFIDENT DECISIONS BEGIN WITH RELIABLE DATA. Beckles emphasized that reliable data, when analyzed properly, will guide the decision making process and support your position. It will also lend credibility to your opinions and recommendations if and when they are challenged. Beckles shared with the group that during her time at Freddie Mac, she would amass data points into daily dashboards to provide a visual interpretation of the story. Beckles indicated that she recommends contemplating different perspectives of a situation to anticipate questions that might arise, and then, to address those questions, determine


While Beckles is optimistic about the increased number of women in strategic positions that can drive the future of the company, she reminded us there is still work to be done. Based upon the percentage of women in the workplace, women are not proportionately represented at the executive and board level.

what data is available for analysis, and find a reliable source for compiling that data. When analyzing the data, you should avoid bias based on pre-conceived ideas or opinions, and instead, let the data reveal the story. Finally, you should ensure that the data is accurate, easy to interpret, and comprehensible before presenting to others. In addition to using data to make decisions and establish objectives, you can also use it to measure success and hold yourself accountable for achieving goals. DEVELOP STRONG COMMUNICATION SKILLS TO ENSURE YOUR VOICE IS HEARD. Many of us women have experienced a situation where we propose an idea

Ingrid Beckles is the Founder and CEO of The Beckles Collective and former Senior Vice President and Head of Default Asset Management at Freddie Mac.

or strategy in a meeting that is ignored or rejected. Then, later in that same meeting, a man makes the same recommendation and meeting participants respond as though it is an original thought. When this happens, it can leave you feeling frustrated and invisible. In a professional setting, effective communication can be a challenge. If a woman objects too loudly or dominates a conversation, she may be seen as overly aggressive. On the other hand, letting someone else take the lead may give the impression you are passive, disengaged, or that you are not a problem solver or original thinker. Beckles suggested alternative ap-

proaches to ensure your voice is heard. • Avoid the inclination to object immediately or react emotionally. Although this is a natural response when you’ve worked hard on something, it is not necessarily the best course of action. A subtle approach may be more effective. Pause, take a deep breath and wait for the right moment. • Evaluate the effectiveness of your communication style. Perhaps you use too many words and lose the attention of decision makers, or provide too much data that does not clearly convey the information you intend. Ask for honest feedback on your communication style from someone you trust to


be honest with you. Then, determine if there are improvements you can make to deliver your message more effectively. • Identify the decision maker(s) involved and deliver your message in a manner consistent with that person’s style. While descriptive and detail-oriented presentations can be an asset in the workplace, many executives prefer a high-level summary supported by factual data. The question you need to ask yourself when preparing is, “What is it I want decision makers or key stakeholders to take away from this?” Then, choose information that will deliver an impactful message and will most likely be understood and retained. Be aware that you may hit a “glass ceiling” and recognize when you have. It’s logical to think that if you work hard, add value to an organization, and produce great results that are aligned with organizational objectives, the right people will notice and eventually, you will be rewarded. Unfortunately, that is not always how it works. So what should you do when, despite your best effort, an invisible barrier seems to stop you from advancing to the next level? Beckles shared some valuable advice about what to do when your efforts aren’t noticed or you hit the proverbial “glass ceiling.” • Review the Situation: Take an introspective approach and review of your skills, abilities, and performance. However, Beckles warns that you should not stay there too long. Everyone has room for growth or improvement. The point is to determine if you have the right qualifications and your results consistently meet or exceed established expectations. • Seek Objective Feedback: Next, seek input and advice from someone who can be trusted to give honest and thoughtful feedback from an objective perspective. The goal is to assess whether the barrier is cultural for the organization or if there is something you can do differently. Either way, proceed with caution as it is important to avoid inadvertently alienating decision makers.

• Develop a Mentor Relationship. When you are too close to the situation, you may not be able to see the big picture. A mentor can alert you to something you might otherwise have overlooked or provide insight into the culture of the organization. Beckles recalled a situation where a mentor at Freddie Mac reminded her to “lift her head up” at a time when it was buried in the work. That prompting gave her a different perspective on an opportunity that eventually contributed to her promotion.

aggressive competition for the few opportunities that exist.

• Research, Compile Data, and Make the Request: Don’t assume that recognition, advancement or raises will just happen. Do not leave your career in someone else’s hands. Ask yourself what you want, conduct research, and compile data to support your request. For example, while seeking out a qualified candidate as part of a succession planning exercise, Beckles took the opportunity to compare her default portfolio to that of other major banks. She compiled information about salary levels for people with comparable positions and skills and learned those salaries were significantly higher than hers. Beckles then used that information to support a request for additional compensation.

YOU MAY NEED TO LEAVE THE COMPANY TO ADVANCE The bottom line is that workplace culture is influenced by the organization’s leadership. Unless senior leaders are modeling the importance and benefits of a diverse workforce, there may be an unbreachable barrier, which will prevent you from reaching your goals and you may have no other choice but to move on. If that is the decision you ultimately make, be sure to be professional as you separate from the company in order to avoid burning bridges.

SUPPORT OTHER WOMEN TO IMPROVE REPRESENTATION AT THE BOARD LEVEL While Beckles is optimistic about the increased number of women in strategic positions that can drive the future of the company, she reminded us there is still work to be done. Based upon the percentage of women in the workplace, women are not proportionately represented at the executive and board level. One way to contribute to balanced representation is for women to do a better job of supporting each other as they move up the corporate ladder. Competition between women in the workplace can serve as a systemic barrier to advancement opportunities. When combined with the right workplace culture, competition can be a motivating force and is only negative when it becomes personal. Generally, when opportunities for promotion and recognition are scarce, it invites more

WOMEN CAN COMPETE IN A POSITIVE WAY AND STILL BE SUPPORTIVE OF EACH OTHER. Consider mentoring a female colleague or co-worker in your organization and encourage women co-workers and friends to participate in organizations like the ALFN’s Women in Legal Leadership where they can meet and learn from experienced professional women within the industry.

By contemplating these valuable insights shared by Beckles and applying the lessons learned through her experiences, it may be possible for all of us women to have a positive impact on workplace culture and chip away at the imbalance in leadership and executive levels over time.


HOW MANY

P THE TO ACY C O V D TEN A KED N A R S ISSUE BERS M E M BY THE MOST IMPORTANT

BILLING & REMITTANCE

CFPB RULE REVIEW

FDCPA REFORM AND CLARIFICATIONS CFPB STRUCTURAL REFORM

GSE REFORM

HOW MUCH

AND HOW LONG

$361

$1,875

Average hourly fee for a consumer law attorney

Average allowable foreclosure fee

- NATIONAL CONSUMER LAW CENTER (NCLC)

THIS FEE VARIES FROM STATE TO STATE AND IS NOT SET BY ATTORNEYS

$93.75

20

Average hourly fee for foreclosure attorneys

Average hours devoted to basic foreclosure file

FOR ILLUSTRATIVE PURPOSES ONLY. FORECLOSURE WORK IS TYPICALLY FLAT FEE AND NOT GENERALLY HOURLY BASED LEGAL WORK.

HOWEVER MOST FORELCOSURE TIMELINES STRETCH AS LONG AS 620 DAYS ACCORDING TO REALTOR MAGAZINE

The average size of an ALFN and USFN firm is 66 attorneys. NARCA reports that over half of its 594 law firms have fewer than 25 employees.

62%

Firms indicate they use an average of 34 third-party vendors.

35%

20%

SUNSET M.H.A.

DIVERSITY ACCESS FOR DIVERSE FIRMS UNIFORM FORECLOSURE LAWS FEDERAL EMPLOYEES AT EVENTS THE LEAST IMPORTANT

GREATER THAN $15M

CREDITORS’ RIGHTS LAW FIRM MEMBERS OF ALFN, USFN & NARCA AVERAGE NUMBER OF COMPLIANCESPECIFIC ROLES CREATED PER FIRM SINCE 2007

25% $10 TO $15M

30% $5 TO $10M

25% LESS THAN $5M

ANNUAL REVENUE OF MEMBER FIRMS


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Paid Leave Can Young Mothers Have it All? BY NATALIE GRIGG, ESQ. PARTNER, WOODS OVAITT GILMAN NGRGG@WOODSOVIATT.COM


I have been a practicing attorney for fourteen years, and a mother for eight. When I was pregnant with my daughter, I worked at a small firm with a maternity leave policy based on the number of years with the firm. Having been there only a short time, I was petrified as to what leave I would be allowed and concerned even more about the finances I would face for the weeks that would not be covered. I timidly walked into the Managing Partner’s office to discuss my billable hours for the year, and how much time I would take off. What I was met with left me complete shock, in a good way, and utter gratitude for having found such a family oriented employer. Not only were my billable hours prorated, with no penalty against me, but I was given eight weeks at full pay (five weeks more than I was actually eligible for), and was allowed to return part-time for a transition period. Needless to say, those first weeks home with my daughter were more easily cherished than had I spent that time worrying about work, finances, or what I would return to. Unfortunately, the experience I had is not the norm. The issue of paid family leave has long been a struggle for women attorneys and employees. Many face struggles with sick family members, the adoption process, or even one’s own disability, which necessitates time off that, may not be easily granted. The establishment of family leave marked a pivotal step in the pursuit of equality and diversity in both the workplace and home. However, the unanswered questions are whether the established family leave is adequate on its own or when compared with other countries, as well as how employers handle this glaring need. PAID LEAVE: A COMPARISON BY STATE AND COUNTRY To date, the only national program available in the U.S. is the Family Medical Leave Act (FMLA), which merely pro-

vides for up to twelve weeks of unpaid time off. Not only is this time off unpaid, but it is limited to employees who qualify based on length of employment and the size of the business Outside of the FMLA, there are only five states that have passed mandatory leave programs throughout the entire country. In 2002, California enacted its law to provide eligible workers with partial wage replacement when taking time off to care for a newborn baby, adopted or foster child. In 2014, this law was expanded to include coverage for leave to care for additional family members including parents, parentsin-law, grandparents, grandchildren, siblings, spouses, or registered domestic partners. The program provides benefits to workers who contribute to the California State Disability Insurance of approximately 55% of their weekly wages up to a maximum weekly benefit amount. An employee may take up to six weeks of benefits over a twelve month period, and can be taken intermittently. In 2008, New Jersey enacted its program to allow for time off for care of a newborn child, an adopted child, or a family member with a serious medical condition. Leave can be taken for six consecutive weeks, or for intermittent weeks or for 42 intermittent days during a twelve month period. The program is financed by worker payroll deductions and employers do not contribute to the program. In 2013, Rhode Island joined the mix of states in enacting paid family leave legislation that covers leave for newborn child, adopted or foster child, to care for a family member with a serious medical condition, or to care for one’s own disability. The law provides for four weeks of family care or 30 weeks of a worker’s own disability. The leave is covered by employee contributions. While Washington State has passed legislation relating to leave, it is not yet in effect due to a lack of funding. However, when applicable, the law will provide for leave for birth or adoption of a new child for five weeks.

This year, in what is being labeled the Nation’s strongest paid family leave program, New York finalized a budget that include a bill mandating paid family leave for most employees. New York is the fifth state across the county to have passed a statewide program to mandate paid leave. The program provides up to twelve weeks of paid time off from a job and covers both full and part time employees. In contrast to the Family Medical Leave Act, there are no exemptions for small businesses and an employee need only be employed for six months to be eligible for the program. The program is employee funded, similar to Unemployment Insurance, in which money will be deducted from employee paychecks. An employer contribution is not required or mandated. The import of New York’s plan is that both men and women can benefit, as it allows parents to stagger leaves to reduce any financial impact, but also because it permits same sex households to benefit and allows for the time for the family to bond. Of even more impact, however, is the leave provided for single-parent households. Already it is estimated that 42% of unmarried mothers live below the poverty line and approximately 30% of single parents are paid minimum wage. With only five out of fifty states enacting legislation to provide for paid family leave, it is clear that the U.S. has a long way to go. It is not, therefore, too surprising that the U.S. is also sorely lacking when compared to other countries. Out of 185 countries, the U.S. is just one of three countries that do not maintain some form of a paid family leave policy. By example, the U.K. provides for 40 weeks of guaranteed leave, Vietnam and Iceland- 26 weeks, Singapore and Bangladesh – 16 weeks, Canada – 15 weeks, China, Chad, and Congo – 14 weeks, and Mexico and Iran – 12 weeks. LAW FIRMS AND PAID LEAVE But on a more basic level, how do law firms approach the concept of paid leave? As a female attorney, is it possible to maintain a work-life balance? Is it possible to be an attorney or in a position of management with a family


THE FOCUS HAS TO CHANGE FROM ONE BASED ON ECONOMICS TO A CONSCIOUS DECISION PERTAINING TO LONG-TERM RETENTION OF ATTORNEYS. and not be stereotyped as “not committed” or covertly placed on what has long been referred to as the “mommy track?” A review of some firms definitively shows that many law firms have recognized the needs of their attorneys, and have adjusted their perceptions to be more accommodating. By example, Nixon Peabody maintains a leave policy that is gender neutral from the perspective that the leave is broken down into “primary caregiver” and “non-primary caregiver” leave and applies equally to childbirth and adoption. For female attorneys who are the primary caregiver, they receive six to eight week short term disability leave (grossedup by the firm to equal full pay), plus an additional ten weeks of paid leave (for a maximum of eighteen weeks of paid leave), while men who are the primary caregiver are eligible to receive ten weeks of paid leave immediately following the birth/adoption of a child. The non-primary caregiver is eligible to receive 4 weeks of paid leave. Likewise, Godfrey & Kahn (a Wisconsin firm) maintains their own “Attorney Guidebook,” which specifically includes

policies on flexible work schedules, telecommuting, and Parental Leave, and they make every effort to ensure that those policies work together. The firm offers twelve weeks of paid leave for the primary caregiver, followed by an extended leave in time to be decided based on individual circumstances. Secondary caregivers are offered four weeks of paid leave. The extended leave is paid for partners and unpaid for associates. Another example is Graydon Head (a Cincinnati firm) that provides for paid Parental Leave of up to twelve weeks on a gender-neutral basis to attorneys 1) who give birth and to care for a newborn child; and 2) for attorneys to care for the needs of a newborn, newly adopted or newly placed child. Moreover, paid Family-Care Leave of up to two weeks is available to attorneys to care for the needs of an ill or elderly immediate family member, and this leave may be extended at the discretion of the firm. While these are just a few examples of the improvements that some law firms have made, what deters other firms from embracing the concept of

paid leave or flexible schedules? One issue is the ability to overcome the “purely economic loss” mindset of the management team. By example, if a firm is crediting the hours (i.e., pro-rating the billable requirement) for the twelve weeks that someone is out on FMLA since that is required, the issue becomes what do to about those who take the extended time that is beyond the twelve weeks? The focus has to change from one based on economics to a conscious decision pertaining to long-term retention of attorneys. Firms also need to allow for and encourage both men and women to take the leave without fear that it will be held against them and ensure that it will not negatively impact them or their billable time in some way. Ultimately, it is axiomatic that paid leave has not only been found to keep women in the workforce but also it helps add more women to it. However, it remains a delicate balance on both the employee and employer side. In the end, it can only be a win-win situation when employers account for real-life issues while women are provided the opportunity to become better attorneys.


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Women In Washington

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BY CAREN CASTLE, ESQ. THE WOLF FIRM CAREN.CASTLE@WOLFFIRM.COM

I

t is less than six months from Election Day, over 20 years since the politically dubbed “Year of the Woman” (1992), and it looks like we may very well have for the first time a female nominee for President of the United States. One of WILL’s primary pillars is advocacy. As such we wanted to take an analytical look at women in public office: where have we been, where are we now, and what impediments, if any, are there for continued advancement. In 1992, about 6% of Congress was made up of women. There were four new women elected to the Senate, and a total of five women senators in that year. One of those new senators, Patty Murray, has been dismissed by her male opponent as “a mom in tennis shoes,” but is


it fair to say “we’ve come a long way baby” since 1992. In the early 1990’s there was an increase in women running for political office culminating in 1992 when the number of women in the Senate doubled and the number of female congressmen went from 28 to 47. Unfortunately, the growth trend has not continued on a smooth trajectory. Since the late 1980’s, women have outnumbered men on college campuses. Statistics show that women earn almost 60% of undergraduate and master’s degrees as well as 45% of all law and 48% of all medical degrees. Women make up approximately 47% of the workforce; however, women represent slightly less than 15% of executive officers and are only 4.6% of the Fortune 500 CEOs.

In the early 1990’s there was an increase in women running for political office culminating in 1992 when the number of women in the Senate doubled and the number of female congressmen went from 28 to 47. Unfortunately, the growth trend has not continued on a smooth trajectory.

Women currently make up over half of the US population, and yet continue to be widely underrepresented in local, state, and federal government positions. The United States ranks 98th in the world for women serving in national government, with women now holding fewer than 25% of the congressional seats. Less than 25% of statewide legislative offices are held by women, there are only 10 female governors, and women make up 12% of the mayors of the 100 largest cities. On average in 2016, women are outnumbered 2-1 by men at state-level cabinet appointee positions. Interestingly, reports show that highly accomplished professional women have less ambition to seek public office than similarly situated men. Women tend to be less tolerant of the campaign process and some 25 years after the “Year of the Woman” still have a harder time reconciling work, family, and a political career than their counterpart men. Women candidates often feel that they must be “overqualified” before considering running for office in terms of their education and experience than their male counterparts. Studies show that the Democratic Party has elected more women than the Republican Party, and that historically women legislators have been more liberal than their male counterparts. The “gender gap” in ideology may in fact be lessening. One-third of Democrats are female, but only 10% of the Republican

Party are women. Studies have further shown that the perception of women in public office is that they have different legislative priorities, often focusing on women, family, and children. Adding to the barrier of electability, the media’s coverage of women candidates is often different than male candidates. Emphasis on women often surrounds appearance, personality, and family life as opposed to the issues. But, why do we need more women in politics… aside from the obvious reason that women make up half of the American adult population? Female legislators tend to introduce legislation that is of more importance to women than male legislators. Life experiences and cultural background are naturally different for women than men, and having diversity in our legislators is important. Women’s political style is often different from men, with females tending toward building a consensus and as a group being more inclusive. Can women change the current divisiveness of Congress? Women are ranked higher in public polling than men in five of the key seven policymaking areas, including compromising, keeping government honest, standing up for one’s principals and beliefs, and representing constituents’ interests. In 2012, women made up 53% of voters, and yet the gender gap is not shrinking to such levels. Women have only had the right to vote since 1920, so some would say women have come a long way since then. However, women have yet to reach their potential and their true influence. Women are perhaps decades away, at the current growth rate, from reaching parity with men in holding leadership roles in the U.S. In order to speed up the process, more women need to run for office at all levels of government, and on both sides of the aisle. As more women are elected to office, perhaps the way in which we are judged and the standard to which we are judged will evolve, and who knows? Maybe through our different approach to politics, different ways of communicating, and our ability to build consensus, great things will be accomplished. Moral of the story: be proactive, be involved, let your voice be heard.


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The Hook

lessons from the road

BY SALLY GARRISON, ESQ. MANAGING ATTORNEY, BAER & TIMBERLAKE SALLY@BAER-TIMBERLAKE.COM


ONCE UPON A TIME, MY BOSS THOUGHT IT WOULD BE A GOOD IDEA TO SEND ME OUT ON THE ROAD….AND NOW I AM WRITING THIS COLUMN SO YOU CAN LEARN AND LAUGH AT MY EXPENSE. The main purpose of life on the road is to make connections – intimidating, terrifying, and lasting connections. My first trip carried with it the same anxiety as the first day at a new school. What should I wear? What should I talk about? More importantly, what should I not talk about? Will anyone talk to me at all? Will I ever get to sit at the cool kids’ table? How will I stand out from the crowd? In a very real way, you have an opportunity to figure out what version of you should attend. All the baggage of your work-a-day life can be conveniently left behind and you can present a new – hopefully likeable and successful – version of you. Some preliminary words of warning: Don’t swing for the fences; this new version of you must be sustainable. You also have to be believable. Now is not the time to try out a Swedish accent or pretend that Willie Nelson is your uncle. Those are short-term strategies; we are in this for the long haul. Most of all, you do not want to be forgettable, which is the ultimate travel failure. As with all things in life, balance is the trick. Conventional wisdom will tell you to ask others about themselves. Unless you are a self-absorbed narcissist, you are probably already doing this. However, it is a round world, and sooner or later someone is going to ask you a question or two. Here is the opportunity to make your mark. Keep in mind that several high-quality conversations are more productive than 20 superficial introductions. If your conversations are interesting enough, they will pay dividends for future travel and relationship building. Being interesting straight out of the gate is intimidating. What you need is a “hook.” The hook is an interesting, unique, authentic thing that is memorable about you. Most of the successful road warriors I know have several: music, dogs, horses, wine, shoes, sports, running, karaoke, or yoga, to name a few. Here is where you can distinguish yourself from the conference herd with an identifiable, memorable trait. Having several go-to hooks is useful for breaking the ice; it provides a welcome conversational security blanket; and it is a launch pad for memorable, and therefore high-quality, conversations. I am not one for the well-worn path; so, my first real hook was, ironically, noodling, a.k.a. fishing without a hook. In fact, fishing with your hand. It’s a “thing” in Oklahoma and we host an international noodling tournament, which I attend as a spectator with alarming frequency. Why, you might ask, would I claim this ridiculous sport as my hook? Well, you are not likely to forget it, it begs follow up questions, and it is specific to my region. Bingo. The perfect hook.


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Amber Waves, Shining Seas, and Grass Roots In recent years the ALFN has significantly stepped up its advocacy efforts on behalf of our members and industry at-large. This year that effort was dramatically impacted by the official participation of other industry trade associations including the USFN, REOMAC and our long-standing advocacy partner, the National Creditors Bar Association (NARCA). We are proud to report that in this vital election year, our joint efforts resulted in over 100 face-to-face meetings with members of Congress in just a single day, April 19, 2016, our annual Advocacy Day. In total, the ALFN has conducted nearly 500 such meetings since 2012. Each time, we're advocating for our members and expressing their concerns, needs, and positions on a variety of issues including regulation, compliance, billing and fees issues, and touching on topics from foreclosure litigation to bankruptcy to evictions. In support of our on-going advocacy efforts, the ALFN this year launched a political action committee, ALFNPAC, which our readers and members will learn more about this summer during ANSWERS. Political contributions are vital to supporting candidates who champion our industry and are critical to the ALFN's efforts to build meaningful relationships with lawmakers across the aisle. Over the next pages you will find copies of the three briefs distributed to members of Congress earlier this year. Our partner associations each authered a brief on an issue critical to our members: the ALFN's brief on the Cost of Compliance, expertly drafted by Andrew Boylan, Esq., of McCarthy Holthus; the USFN's brief on Law Firm Viability and Billing Compliance Regulations; and the National Creditors Bar Assocation's brief on the Federal Regulation of the Practice of Law. Explaining these issues to Congress is but one step in a successful, meaningful, grassroots advocacy effort. In order to do that, we need our members' participation. Meetings are secured based on constituents attending and that's why we need your voice, your face, and your expertise in Washington, D.C. next year for Advocacy Day 2017. It's you who helps gets us the meetings and it's you who knows these issues better than anyone else. To those who have volunteered and supported this incredible program over the years, we thank you. And to everyone else who advocates at home, we hope to see you in Washington next year. Thank you. Cade Holleman, M.A. Vice President, Government Affairs & Communications American Legal & Financial Network


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ADVOCACY ISSUE

BY ANDREW BOYLAN, ESQ. CHIEF COMPLIANCE OFFICER, MCCARTHY HOLTHUS ABOYLAN@MCCARTHYHOLTHUS.COM


BACKGROUND Compliance is a given within the highly-regulated mortgage industry. It always has been and always will be. But what has changed over the past few years is the amount of compliance that is required due to the unprecedented level of regulatory implementation. Compliance is no longer just a concern for the legal department. It now affects all lines of business, including: operations, production, risk management, marketing, and most notably accounting. FannieMae’s quarterly Mortgage Lender Sentiment Survey provides insights and benchmarks to help mortgage industry professionals understand market trends and assess their own business practices. The Survey has consistently ranked government regulatory compliance as the number one reason lenders expect lower profit marginsi. But what the survey doesn’t cover is the domino effect that this rising cost of compliance continues to have on other industry members. The ALFN, USFN, NARCA and REOMAC are largely made up of law firm members representing mortgage lenders and servicers. Member firms are retained to assist with various mortgage default services, including: foreclosure, REO, evictions, title and title curative. Firms have long been selected based upon their proven expertise within the jurisdiction(s) in which they operate. However, that is no longer enough in today’s heightened regulatory environment. There must be a proven commitment to compliance within the firm. THE ISSUE Entities under the purview of the CFPB are required to have processes in place to ensure full legal compliance of their third party service providers, including law firms. This catch-all provision is fully encompassing. Therefore, although most of the robust rules, regulations, laws, and consent orders are aimed at financial lending institutions with a national presence, they have just as much of an impact if not more on third party service providers operating primarily at the state and local level. The idea of regulatory oversight is nothing new for the legal industry. Law firms have long reported to their state bar associations in addition to complying

with various local, state and federal laws. Some firms may be subject to more rules and regulations than others depending upon their practice area and client base. However, the recent onslaught of regulations has posed a disparate impact on firms representing the mortgage industry. The constantly changing landscape at the federal, state and local level paired with the perennial audits imposed by regulators, clients, and their clients’ investors have become an extreme financial burden for many firms in our industry. Law firms representing mortgage lenders and servicers are unique within the legal community in that they operate largely under a capped flat-fee billing model imposed by the Government Sponsored Enterprises Fannie Mae and Freddie Mac. Although this fee structure only applies to those portfolios of loans, it has been largely adopted by most investors, lenders, and servicers within the industry. As a result, the costs associated with the continuing compliance efforts must be entirely absorbed by the law firm with no additional billing opportunities. Over the past few years, it has become necessary for firms to employ full teams of compliance attorneys and legal staff to meet their clients’ expectations. Failing to do so will not only expose the firm to potential risks, but it will likely result in a loss of business. The continuing spike of non-production related costs like compliance are resulting in decreased profit margins which unfortunately are causing a growing number of firms to either exit the industry or shut their doors indefinitely. THE ASK The ALFN, USFN, NARCA and REOMAC asks members of the federal government to keep in mind the interests of all members of the mortgage industry when they are confronted with a new piece of proposed legislation or regulation. Trade groups like ours are readily available for discussion to provide insight as to the potential unintended impacts that proposed changes may have on the non-lending constituents within the mortgage industry. i http://www.fanniemae.com/portal/research-and-analysis/mortgage-lender-survey. html


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ADVOCACY ISSUE

AUTHORED BY

MEMBERS & EXECUTIVES

COMPLIANCE

OF THE USFN

BACKGROUND In the wake of the economic crisis that effected the mortgage banking industry, and the resultant and reactionary Dodd-Frank regulatory scheme, many of the law firms, upon which the mortgage banking industry relies upon for counsel and default related legal services, have succumbed to the daily economic and cash flow pressures created by the over-regulation surrounding billing and invoicing practices. In the past 18 months, the industry has lost numerous default servicing law firms. Firms with long tenure, multi-state practices, that have been in existence

for decades, are among the victims. More importantly, lost with the firms are decades of legal expertise upon which the banking industry relies, and thousands of jobs in a recovering economy. Further, these losses will continue unless some measure of reason and common sense is brought to bear with regard to the current over-regulation in our industry. THE ISSUE One of the most critical issues currently facing the mortgage default industry is law firm viability caused primarily by cash flow constraints. These con-

straints have been the direct result of over-regulation and excessive litigation surrounding billing and invoicing practices within servicing companies. Since the creation and implementation of the Consumer Financial Protection Bureau’s Mortgage Servicing Rules, mortgage servicing law firms have been overly burdened with ever increasing regulatory compliance requirements. Under these new regulations, these professional service law firms are now considered Third Party Vendors. They are held to the same regulatory standards as the financial institu-


requirements are not only costly to the firm, but also take a considerable amount of time, labor and process automation to complete accurately. And worse, they change constantly and are different from servicer to servicer, making full use of automation impossible. The law firms have multiple clients, all with differing systems and procedures and each requiring differing methods of reporting. This can be remedied by industry-wide adoption of clear, consistent and reasonable standards by which all servicing companies can properly operate within the current legal and regulatory rules, while allowing their law firms to standardize operating and technology processes in the firm. Unfortunately, and to compound the challenge, due to investor claim policies and procedures, the required time lines in which invoicing must be done has been reduced substantially over the last few years. In many instances, the law firm is placed in a “Catch 22” situation, to decide whether to forego invoicing certain items because backup documentation is not yet available, or to submit invoices which do not comply with the regulations. Moreover, if a law firm fails to “timely” submit an invoice to a lender, the invoice may be summarily rejected. Further, as a consequence tions of the increased scrutiny, invoices are and frequently rejected for reasons that are servicing sometime minute. The firm is then left companies who to re-invoice or rebut the rejection withretain their services. in a very tight time frame. The result is Most of these firms emthat thousands of dollars in fees can be ploy between 50 and 300 people lost by a firm annually. While the goal and yet they are expected to pay for of these practices is to insure consumand implement security and privacy er protection, they sometimes go far infrastructures on par with Fortune 500 beyond reason and leave default law companies. The costs of compliance firms carrying an unprecedented and can be crippling and are a tremendous unreasonable burden. barrier to entry for future startup businesses. As a further problem, in years past, mortgage servicers would pay a One of the more egregious areas of retainer or cost advance to the firm regulation centers on the billing and at the time of referral. In the wake of invoicing practices implemented and the increased regulation and scrutirequired by the mortgage servicers ny, this practice ceased and the law in their attempt to meet or exceed firms are now expected to advance all perceived regulatory standards. As costs associated with the foreclosure a result, a law firm’s overhead assolitigation. Often, firms can lose not only ciated with invoicing has drastically their hard earned legal fees, but they and dramatically increased in the past are unable to recapture the funds that five years. Firms are now required to they have been forced to advance on provide backup documentation and behalf of the lenders. Loan investors legal opinions for each and every line and insurers can immediately remedy item included on an invoice. These this by allowing servicers to advance

hard costs and allow the servicers to then seek investor reimbursement. Currently the smallest and most vulnerable party – the law firm - is left bearing the burden. And in this perfect storm, adding to the regulatory burden is ever-increasing consumer litigation under the Fair Debt Collection Practices Act (FDCPA). Not only is the law firm prosecuting a foreclosure case inappropriately considered a debt collector, thus falling under the purview of the FDCPA, several recent decisions in the Third and Eleventh Circuit Courts have for the first time found that pleadings filed by a law firm in foreclosure action are considered “communications”, thus falling under the FDCPA as well. See, Kaymark v. Udren Law Offices, 783 F.3d 168 (3d Cir.2015); See also, Prescott v. Seterus, Inc., LEXIS 20934 (11th Cir. 2015). Compounding and exacerbating the law firms’ pressures is the intolerance of error. Most loan servicers require exacting performance standards at or near zero tolerance for error, besting even the theory of Six Sigma1. In theory this concept is admirable, but in practice it is almost impossible to achieve in this industry over a sustained period of time. The constant and relentless pursuit of perfection has inevitably driven up labor costs. Unless the current flat- fee model promulgated by the GSEs and the insurers is re-evaluated and regularly re-adjusted, more firms will continue to buckle under and may be forced out of business. THE ASK The members of ALFN, USFN, NARCA AND REOMAC request that the legislature enact amendments to the Dodd Frank Act and the Fair Debt Collections Practices Act which exempt law firms conducting judicial and non-judicial foreclosure actions from the purview of the two Acts. In addition, servicing companies and their law firms should be encouraged to work together to develop and adopt consistent, standard processes that meet the letter of the law and provide for more cost efficiencies for all, ultimately benefiting borrowers.


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ADVOCACY ISSUE

BACKGROUND Excerpt from “The Erosion of Lawyer Independence”, Business Law Today, January 2016 GUTTING DODD-FRANK’S PRACTICE OF LAW EXCLUSION The court found the authority for the CFPB to regulate how an attorney files and prosecutes a lawsuit in Title X of the Dodd-Frank Act. Title X contains an exemption for the practice of law: Except as provided under paragraph (2), the CFPB may not exercise any supervisory or enforcement authority with respect to an activity engaged in by an attorney as part of the practice of law under the laws of a State in which the attorney is licensed to practice law. There are two strangely worded exceptions under the referenced “paragraph (2).” It is the second exception to the exemption that allows the CFPB to regulate attorneys – at least that’s what the court found. The exception covers “the offering or provision of a consumer financial product or service . . . that is otherwise offered or provided by the attorney in question with respect to any consumer who is not receiving legal advice or services from the attorney in connection with such financial product or service.” Still, it would seem that an attorney representing a creditor in a lawsuit against a debtor would not have “of-

fered or provided” a financial product or service. But that is exactly what the CFPB believes and so did the court. The decision allows the federal executive branch to regulate the practice of law, because an attorney suing a debtor to collect a consumer debt is deemed to be providing the debtor with a financial product or service. NOT LIMITED TO DEBT COLLECTION ATTORNEYS The decision is so broad in its reading of the practice of law exception that it can be construed to allow CFPB regulation over every attorney engaged to represent lenders in a consumer credit matter. It can be used by the CFPB to take enforcement actions against law firms practicing debt collection or foreclosure law or representing lenders in loan transactions. Of immediate concern to all attorneys, the decision places no boundaries on the CFPB’s regulation of attorney professional conduct. Attorneys view this additional regulation and oversight not as a hindrance but, rather, as a framework of accountability that guarantees the right of litigants to submit their controversies before the courts for orderly and equitable disposition and determination. CRACKING THE “CORNERSTONE OF ANY DEMOCRATIC SOCIETY” The American Bar Association has op-

posed efforts allowing attorney regulation by executive agencies in the past. These efforts have included opposition to mandatory accrual accounting for law firms, federal agency policies that erode or undermine the attorney-client privilege and work-product doctrine, and “gatekeeper” regulations that would subject lawyers to anti-money laundering compliance. As a matter of policy, “the ABA opposes federal legislation or rules that would undermine traditional state court regulation of lawyers, interfere with the confidential attorney-client relationship, or otherwise impose excessive new federal regulations on lawyers engaged in the practice of law.” (www.americanbar. org/advocacy/governmental_legislative_work/priorities_policy/independence_of_the_legal_profession.html) The CFPB’s efforts in the Hanna matter are squarely focused on how a law firm practices law. The bureau’s complaint alleges Hanna attorneys violated the Dodd-Frank Act by filing lawsuits before adequately reviewing their files or without having sufficient documentation. In opposing similar efforts in the past, the ABA has stated that “regulation independent from the executive branch of the state” is a “cornerstone of any democratic society . . . and also necessary for the sound administration of justice.” (www.ccbe.eu/fileadmin/


user_upload/NTCdocument/CCBE_ and_ABA_letter_1_1325686329.pdf) In 2012, the Committee on Consumer Financial Services of the Business Law Section noted in comments on the bureau’s rule “Defining Larger Participants in Certain Consumer Financial Products and Services Markets,” that the CFPB appeared to be sidestepping Congress’ intent in crafting an exemption that intended to prohibit the bureau’s regulation of the practice of law. (http://consumerfsblog.com/wp-content/uploads/2016/01/CL230000-otherlinks_files-proposed_rule.pdf)” THE ISSUE “A recent decision from a U.S. district court in the Northern District of Georgia, CFPB v. Frederick J. Hanna & Associates, P.C., et al., allowed the Consumer Financial Protection Bureau (CFPB) to proceed with an enforcement action largely focused on how a law firm prosecuted consumer collection cases in Georgia state courts. The decision concerns a lawsuit filed by the CFPB alleging that Hanna’s lawyers are not “meaningfully involved” in the collection lawsuits they file for their creditor clients. To put it another way, the CFPB contends Hanna’s lawyers violated consumer protection law because they are not diligently lawyering against consumers. The Hanna law firm moved to dismiss the complaint arguing the CFPB had no authority to dictate how a law firm can conduct state court litigation.”1 Creditors rights attorneys, like all attorneys, are licensed, regulated and supervised at the State level by their state bars and judiciary. Federal executive regulation is not appropriate when it undermines the traditional state court regulation of lawyers. THE ASK The ALFN, USFN, REOMAC and the National Creditors Bar Association (NARCA) seeks support from legislators to ensure that the Consumer Financial Protection Bureau is prohibited from regulating attorneys engaged in the practice of law.

THE D BY E BAR R A ORS T I PREP D E CR N ONAL I T I AT I O A C N O S AS


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BY JEFFREY B. FISHER, EVP OF BUSINESS DEVELOPMENT, BP FISHER LAW GROUP, LLP In a mashup of metaphors of the undead, the Maryland General Assembly has driven a silver stake into the heart of zombie debt by its passage of SB 771, which was signed by the Governor as Chapter 579, Acts of Maryland 2016, and which will take effect on October 1, 2016. While a silver stake will kill a vampire, this silver stake may not kill the debt buying industry. It will, however, leave it in the hands of those best capable of performing complete due diligence on debt portfolios for sale. “Zombie debt is just that—and old debt that won’t die off. It may be passed from one debt buyer to another, for years, until one day consumers are startled to find a collector demanding payment. . . Consumer and bankruptcy lawyers say zombie debt cases have

grown along with the debt purchasing industry”, according to Eileen Ambrose in her article in the Baltimore Sun on May 6, 2007. The most comprehensive data available about the age of debts being collected by debt buyers comes from a 2013 FTC study of the debt-buying practices by some of the nation’s largest debt buyers. This study found that nearly 25 percent of debt acquired from the original creditor and more than 60 percent of debt purchased from other debt buyers was over three years old at the time of purchase. More than 30 percent of the debt purchased from other debt buyers was over six years old. This type of debt resulted in 30,000 to 40,000 suits a year in Maryland’s lower level trial court, the District Court. In

2010, a law firm that handled these types of cases failed, resulting in the dismissal of 27,000 cases. In March, 2011, a debt buyer agreed to drop more than 10,000 cases without admitting wrongdoing, to settle a class action lawsuit. In July 2011, the Chief Judge of the District Court ordered a stay on about 900 such cases, where the plaintiff had failed to secure a collection agency license. Due to the sheer volume of these cases, judges were not acting on them with full understanding and were acting on them inconsistently. Many consumers were not appearing in court and defending, resulting in judgments entered against them. The debt buyer would then pursue collection action including wage garnishment. In response to these and other concerns, in early 2012, the Mary-


land Court of Appeals adopted rules proposed by its Standing Committee on Practice and Procedure. The rules defined consumer debt and imposed requirements for pursuing debt cases with more transparency to the consumer. Claimants in such cases under the new rules would need to provide proof of the debt, such as a signed document or a statement showing the account was used by the consumer. Debt buyers also needed to prove ownership of the debt, including the ownership trail and documentation of the purchase of the debt. More specificity was required as to the amount of the debt, including breakdowns between principal, interest and late fees. However, the court did not have the ability to enact a full set of substantive reforms to protect consumers and to provide transparency because its authority is limited to passing procedural rules. To fill that void, Attorney General Brian Frosh spearheaded the successful effort to have comprehensive legislation considered by the General Assembly. The new law imposes evidentiary requirements on a debt buyer or its collector. These requirements do not supplant the District Court rules established in 2012, but dovetail with them. First, there is a substantive legal requirement that the debt buyer or collector have the required documentation before beginning an action. If the judgment is to be entered by affidavit, it will be done so in accordance with the court rules. Otherwise, the court may not enter judgment unless the debt buyer or collector produces the required documents in accordance with the normal rules of evidence, even if the action is a small claims action. The required documentation includes proof of the debt by producing a document signed by the debtor establishing the account, or a bill reflecting purchases and payments by the debtor, or an electronic printout from the original creditor establishing the existence of the account and showing purchases, payments or other actual use of the account or the credit card. The debt buyer or its collector must produce a document evidencing the terms of the account with certain exceptions for credit card debt, including a requirement that there is no demand for interest or inter-

est on the charge off balance. The debt buyer or its collector are required to establish ownership of the debt including, a chronological list of all prior owners of the debt back to the original creditor and the date of each transfer, a copy of the bill of sale for each transfer in the chain, documentation of the identification and nature of the debt and, if there has been a charge off, the date of the charge off and the balance at that time, along with an itemization of any additional fees or charges claimed. All payments received after charge off must be accounted for and the date of the last payment must be provided. If the debt has not been charged off, the debt buyer or its collector must provide an itemization of the claim giving credit for all payments made, a statement of the amount and date of the consumer transaction giving rise to the debt (or for multiple transactions, the amount and date of the last transaction) and the amount and date of the last payment. Finally, the debt buyer or its collector must list all Maryland Collection Agency Licenses they hold. See generally, Section 5-1203, Courts Article. Due to the onerous burdens placed on debt buyers and debt collectors, there was a lot of legislative wrangling over who would bear these burdens, i.e, who is the debt buyer. Exclusions were granted to: 1.) a check services company collecting an unpaid item; 2.) a company that purchased the original creditor or is a successor by merger of the original creditor; 3.) a bank, credit union or savings and loan association that is a merger successor to another bank, credit union or savings and loan association that had owned the debt; 4.) a Maryland licensed mortgage loan servicer unless it collects or attempts to collect deficiency balances; 5.) the finance company under a retail installment sales agreement; 6.) a bank, credit union or savings and loan association that bulk purchases from another bank, credit union or savings and loan association all of a specific type of consumer debt of the selling institution. See generally, 5-1201(I)(2) Courts Article.

At common law statutes of limitation are not favored and in most states, they do not extinguish the debt. They are traditionally an affirmative defense. Also, because common law supports the payment of just debts, reaffirmations or acknowledgment of the debt, or partial payment on account have typically had the effect of extending the statute of limitations. There have been inroads to these common law rules under the Federal Fair Debt Collection Practices Act. See for example, Limber v. Fed. Fin. Corp., 668 F. Supp. 1480, 1488 (M.D. Ala. 1987), where the court found that the defendant violated the FDCPA by filing a collection lawsuit after the statute of limitations had expired. The court reasoned that “timebarred lawsuits are, absent tolling, unjust and unfair as a matter of public policy, and this is no less true in the consumer context.� In addition, the CFPB has identified the collection of time-barred debt as one of the areas it will explore in its Supervision and Examination Manual, and devoted an entire section to time-barred debts in its Advanced Notice of Proposed Rule Making for debt collection. Maryland has not waited for further judicial or regulatory action. As of October 1, 2016, Section 5-1202 of the Courts Article will provide that any creditor of consumer debt (original creditor or debt buyer/assignee) may not initiate a collection action of a consumer debt after the expiration of the statute of limitations applicable to the action and that, once the statute of limitations has passed, any subsequent payment, and written or oral affirmation of the debt or any other activity on the debt may not revive or extend the Statute of Limitations. This law will deserve much study from interested industry participants before its effective date but between the very heavy burdens placed on a debt buyer and the inability under any circumstance to extend a time limited debt, it seems clear that debt buyers purchasing debt in Maryland will feel staggered by that silver stake and, as is the way of things, only the strong will survive. Contact the author, Jeffrey Fisher, at jfisher@first-legal.com.


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Member Spotlight

PRACTICE AREAS Foreclosure | Loss Mitigation | Deed in Lieu | Mediation | Bankruptcy | REO and Eviction | Real Estate Litigation | Title Curative Complex Litigation | HOA Defense | Senior Lien Monitoring | Collection Actions FIRM AND MEMBERSHIP DETAILS Founded 1991 and headquartered in Seattle, Washington, Weinstein & Riley, P.S. is an ALFN Enterprise Member in Colorado, Nevada, New Mexico and Washington state. Learn more about about the firm online at w-legal.com or contact Deanna Lee Westfall, Esq. at DeannaW@w-legal.com.

Weinstein & Riley, P.S.

PICTURED LEFT TO RIGHT: Jason Bousliman, Esq., Managing Attorney, New Mexico office; Charles Kennon III, Esq., Managing Attorney, Nevada Office; Deanna Westfall, Esq., Managing Attorney, Colorado office and GSE firm coordinating attorney; and, Daniel Ross, Esq., Managing Director, Weinstein & Riley. Weinstein & Riley is an ALFN Enterprise Member in Colorado, Nevada, Washington and New Mexico.


When West, One Should Weinstein. Weinstein & Riley, P.S., was founded as a litigation, bankruptcy and creditors’ rights firm in 1991. The firm’s commitment to technology has made it a leader in investor and servicer communication. The firm’s founders have represented institutional and individual creditor clients for over 30 years. We provide every client personalized service to meet their financial goals. As a member of the legal community, we emphasize good relationships with attorneys locally and nationally. We believe in a collaborative approach to providing excellent, expert service. By participating in legal education forums, the firm shares its knowledge and learns from other practitioners. The firm’s attorneys write and edit publications for state bar associations as well as national publishers. Weinstein & Riley, P.S., has extensive state and federal court litigation experience as well as an active compliance group. Our bankruptcy group delivers national bankruptcy services to our creditor clients on both secured and unsecured assets. Additionally, the firm provides GSE authorized services in eight states. Our attorneys have the training and expertise to handle any matter quickly and efficiently and within investor timelines. The firm’s litigation group provides representation in complex litigation, avoiding the need for our clients to move files to new counsel once they become contested. Weinstein & Riley, P.S. 11101 West 120th Ave., #280, Broomfield, CO 80021 Phone (303) 539-8607 Web w-legal.com


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On the Books: Minnesota

Assignment Challenges in Minnesota—Don’t Forget to Challenge the Borrower’s Standing By Kevin Dobie and Paul Weingarden, Usset, Weingarden & Liebo, P.L.L.P. Ever since the decision in Jackson v. MERS, 770 N.W.2d 487 (Minn. 2009), which reintroduced the notion of strict compliance in Minnesota’s non-judicial mortgage foreclosure proceedings, borrowers have used this heightened standard to attack foreclosures for any perceived waver from the statute, including the section requiring that all assignments be recorded prior to commencing the foreclosure. Where the mortgagee defends these strict compliance claims by asserting that the borrower lacks standing to challenge the foreclosure, mortgagees have obtained somewhat differing results. On occasion, the difference has turned on whether the case is argued in state versus federal court. A recent decision on the validity of an assignment was discussed in Brown v. Green Tree Servicing, LLC, __ F.3d __ (8th Cir. April 20, 2016), where the

Eighth Circuit ruled plaintiff homeowners do not have Article III standing to challenge an allegedly invalid mortgage assignment between creditors as they were not injured by the assignment and any harm to them was not fairly traceable to the allegedly invalid assignment. Using the following reasoning, the Eighth Circuit confirmed in Brown that the borrowers must have standing to challenge the assignment before they can challenge a foreclosure for a defective assignment: We first address whether the Browns have Article III standing to challenge an allegedly invalid mortgage assignment between creditors. See U.S. Const. art. III, § 2, cl. 1; Brown v. Medtronic, Inc., 628 F.3d 451, 455 (8th Cir. 2010). To establish standing to raise their assignment claim, the Browns must show they have “suffered a concrete and particularized injury that is fairly traceable

to the challenged conduct, and is likely to be redressed by a favorable judicial decision.” Hollingsworth v. Perry, 570 U.S., 133 S. Ct. 2652, 2661, 186 L. Ed. 2d 768 (2013). The Browns have not done that. The Brownsʼ invalid assignment claim is nearly identical to the claim two homeowners asserted against a foreclosing lender in Quale v. Aurora Loan Services, LLC, 561 F. App'x 582, 582-83 (8th Cir. 2014) (unpublished per curiam). In Quale, "we determined the homeowners did not have standing to raise such a claim because they 'were not injured by the assignment' and any harm to the homeowners was not fairly traceable to the allegedly invalid assignment. Id. at 583 (noting the assignor, not the homeowner, is '[t]he party injured by an improper or fraudulent assignment'). We reach the same conclusion here.” See also Novak


v. JPMorgan Chase Bank, N.A., No. 1200589, 2012 U.S. Dist. LEXIS 119382 (D. Minn. 2012), and Gerlich v. Countrywide Home Loans, Inc., No. 10-4520, 2011 U.S. Dist. LEXIS 100844 (D. Minn. 2011). How would state courts hold on this issue? There is no clear answer, but a few cases are instructive. In Oppong-Agyei v. Chase Home Finance, A12-2325, 2013 Minn. App. Unpub. LEXIS (Minn. App. 2013) (unpublished), the Minnesota Court of Appeals said that assignments in blank and stray assignments were ineffective and of no concern to the validity of the foreclosure. In Wollmering v. JPMorgan Chase Bank, A12-1926, 2013 Minn. App. Unpub. LEXIS (Minn. App. 2013) (unpublished), in response to an allegation of an unrecorded mortgage interest, the Minnesota Court of Appeals rejected the allegation by holding that any dispute between the mortgagee and an assignee of the mortgage interest or promissory note would not affect appellants’ status in foreclosure-by-advertisement proceedings. Id. at *18 (citing Jackson, 770 N.W.2d at 501 (“In essence, any disputes that arise between the mortgagee holding legal title and the assignee of the promissory note holding equitable title do not affect the status of the mortgagor for purposes of foreclosure by advertisement.”). Creditors are hopeful that such language would apply to an attack on validity of assignments in state courts, but until the exact factual question is considered and a precedential decision is published, each state court’s determination is unknown. Thus, it is extremely important that practitioners assert standing as a defense in cases where borrowers claim that a mortgagee wavered from strict compliance with the foreclosure statutes, and the failure to assert lack of standing may lose the case. For example, in Badrawi v.Wells Fargo Home Mortgage, 718 F.3d 756 (8th Cir. 2013), the Eighth Circuit said that the mortgagor could not challenge the recording of a Notice of Pendency prior to the first date of publication as required by Minn stat section 580.032. The court cited an old Minnesota Supreme Court case where a lessee tried to challenge the

foreclosure based on the mortgagee’s failure to serve the lessee, but the court said that the service on the mortgagor was sufficient and the lessee was not part of the protected class, i.e., did not have standing. The mortgagee in Badrawi argued and the court agreed that Minn. Stat. § 580.032 protects only those with “a redeemable interest in real property” who “request notice of a mortgage foreclosure by advertisement,” Minn. Stat. § 580.032, subd. 1, and that Badrawi had not requested such notice because “as the mortgagor and occupant of the relevant property” she had received direct notice. Because Minn. Stat. § 580.032, subd. 3 could not have been “prescribed for [Badrawi's] benefit,” her claim to relief under that statute failed and strict compliance was ignored. Badrawi, 718 F.3d at 758 (citing Holmes v. Crummett, 13 N.W. 924 (Minn. 1882)).

Thus, it is extremely important that practitioners assert standing as a defense in cases where borrowers claim that a mortgagee wavered from strict compliance with the foreclosure statutes, and the failure to assert lack of standing may lose the case. The Eighth Circuit also recognized that its conclusion conflicted with Ruiz v. 1st Fidelity Loan Servicing, LLC, A111081, 2012 Minn. App. Unpub. LEXIS 203, (Minn. App. 2012) (unpublished) affirmed on other grounds 829 N.W.2d 53 (Minn. 2013), in which a panel of the Minnesota Court of Appeals granted a homeowner relief on a similar claim based on the same statute. Badrawi, 718 F.3d at 760. The Eighth Circuit explained that the Ruiz Court of Appeals decision was unpublished and was neither controlling nor persuasive. Furthermore the Eighth Circuit explained, the mortgagee did not present the protected class-standing defense in Ruiz, and in a split panel, it elected not to follow the Ruiz reasoning. Accordingly, it seems that challenges to a foreclosure in Minnesota can turn on whether your case is heard in either federal or state courts and whether the mortgagee raises the standing defense. Practitioners should be wary of these distinctions.

Contact the authors Kevin Dobie at Kevin@uwllaw.com and Paul Weingarden at paul@uwllaw.com.


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ALFN ANGLE Spring 2016  

The 2016 Advocacy and WILLPOWER Issue

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