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Mortgage Banking Newsletter – October, 2018

In this newsletter we cover the following:
  • Lehman Brother Litigation Alert
  • Upcoming Marketing Service Agreement Webinar
  • Complimentary LO Comp and other Webinars
  • The Legal Services we offer at Johnston Thomas
  • Upcoming conferences that Johnston Thomas will be attending
Welcome to the October Installment of Johnston Thomas’s Newsletter

To all our preexisting clients, industry friends and strategic partners whom are in receipt of the Johnston Thomas Newsletter, as well as any and all the new readers whom have decided to subscribe hereto, we welcome and thank you for taking the time to read about those topics that we believe to be of great importance to the mortgage banking industry in which we all are fortunate enough to be a part of and to those mortgage banking professionals whom we count ourselves lucky to work alongside.

As part of our ongoing effort to provide our readers with content rich Newsletters, including timely discussions on those topics that are of great concern and interest to many within our industry, we always welcome any and all follow-up questions and/or feedback that you and/or your companies may have. In fact, if any of you have such questions and/or feedback, please know that we will be in attendance at the New England Mortgage Bankers Conference in Newport, RI, and/or the MBA’s Regulatory Compliance Conference in Washington D.C. later this month. To that end, we are always grateful for the chance to meet with you in person, to hear firsthand what your most pressing business and legal challenges are, to discuss all those ways in which our attorneys and other legal professionals can help to address such challenges, and to always listen about how we can better tailor our Newsletters and services to your needs.

Finally, as many of you already know, the professionals who comprise Johnston Thomas’s Mortgage Banking Practice Group represent our clients in matters that include, but are not limited to, repurchase and make-whole lawsuits, Servicer litigation, third-party mortgage fraud litigation, appeals to HUD’s Mortgagee Review Board, preparation of policies and procedures, creation of Loan Officer Compensation plans, formation of Marketing Service Agreements, assisting with the negotiation and review of Broker and Correspondent LPAs, and much, much more.

LBHI Litigation Alert: Lehman’s Third Wave of RMBS Litigation Claims Move Forward and New York Bankruptcy Court Orders Oppositions to be Filed by October 23

On October 2, 2018, Lehman Brothers Holdings, Inc. (“LBHI”) filed two motions that attempt to expand the scope of the claims in the current litigation proceedings, which have only involved LBHI’s claims for indemnification relating to its prior settlements with Fannie Mae and Freddie Mac. These motions attempt to add a demand for indemnification relating to LBHI’s settlements with a large number of RMBS Trustees. LBHI asserts its claims involve approximately 6,200 lenders and more than 72,000 loans. The first motion attempts to amend each of the individual adversary Complaints LBHI filed to include these RMBS related loans. The next motion seeks to amend and enlarge the Bankruptcy Court’s June 2014 Alternative Dispute Resolution Order (the “ADR Order”) to include these RMBS related loans.

In response to LBHI’s motions, the Bankruptcy Court ordered LBHI to supply those defendants with information concerning the loans that LBHI alleges to be at issue as a result of its settlement with the RMBS Trustees, a settlement the Bankruptcy Court valued at approximately $2.38 billion after conducting a nearly month long estimation hearing back in March of 2018. LBHI’s motion to amend and extend the ADR Order, however, affects a much greater number of lenders, many of whom have now received LBHI’s printed booklet with notice of its motion. Needless to say, it appears that LBHI now intends to pursue its RMBS related claims in the same manner it pursued its GSE related claims, which is by having the Bankruptcy Court issue an Order requiring the parties to attend a non-binding mediation of the disputes in New York.

Although many people have been acting under the belief that the response date is Monday October 15, 2018, the Court just modified the date to require parties to file their Oppositions by Tuesday October 23, 2018, Concerning the motion to amend the ADR order, the Court already found the terms to be fair and entered them one time in the past, so the Court will likely enter them again. Accordingly, any prospective objection should focus on the procedure and costs, and should be based on the problems that people faced in the first mediation sessions, a number of them which we have experience handling in the first round of mediations held in New York. If you have received a booklet and/or any other materials from Lehman, with notice of LBHI’s motion to amend and extend the ADR Order, we are happy to provide a complimentary/free legal consultation this week, at which time we will discuss how our team of mortgage banking legal professionals can be of assistance.

With the attorneys in Johnston Thomas’s mortgage banking group having a combined experience of representing, defending and/or mediating more than sixty (60) lenders against claims by LBHI alone, both in and out of court, as well as our working with local counsel and its LBHI clients, we are not only able to provide our clients with top legal representation but are also able to do so in a way where we are able to save our clients a great deal of fees and costs.

For more information on how to protect your rights and take advantage of our legal team’s expertise and cost savings, please contact Johnston Thomas’s Mortgage Banking Chairman James Brody or Partner Ryan Thomas, both of whom are actively involved in representing Johnston Thomas’s mortgage banking clientele.

Johnston Thomas to Host Compliance Tips and Trends: The Resurgence of Marketing Service Agreements, Affinity Relationships, Joint Ventures and Affiliated Businesses

Date: Thursday, October 18, 2018
Time: 10:30 a.m. PST / 1:30 p.m. EST
Duration: One Hour

Mortgage Industry participants are looking at business relationships to increase business, borrower experience, and the bottom line.
RESPA or the Real Estate Settlement Procedures Act governs virtually every relationship there is in the mortgage loan origination business. Previously, the industry thought they understood how RESPA worked. Then the CFPB shook that interpretation, opening up an onslaught of questions and concerns about what actually is and is not compliant.

Reviewing the various business options can be a challenge for even the most seasoned Compliance Officer. RESPA’s strict anti-kickback and referral provisions that can trip up even the most sophisticated businesses. Participants in the mortgage and real estate industries often struggle with making practical business decisions while simultaneously avoiding violating RESPA.
This complimentary webinar, which will be hosted by Johnston Thomas, will attempt to guide you in the assessment of your current and prospective agreements. James Brody, Chairman of Mortgage Banking Practice Group for Johnston Thomas, will provide insights into practical solutions to help you remain compliant.

Some of the many issues that will be discussed during this comprehensive webinar include, but are in no way limited to, the following:

  • Latest interpretations of RESPA
  • Putting CFPB consent orders into perspective
  • Review of RESPA Sections 8(a) and 8(c)(2)
  • Evaluating the legal developments
  • Values and risk of Marketing Service Agreements
  • What not to do in your MSA contracts
  • Incorporating and forming Joint Ventures or Affiliated Businesses
  • Facilitate success of joint ventures without regulatory risk/shame joint ventures
  • Evaluating the legal developments regarding marketing, referrals, and Affinity Relationships
  • Considerations in licensing, referrals, and affinity relationships
  • What about UDAAP?
  • Lessons Learned – How to ensure current arrangements are in compliance
  • Where do lenders and others go from here?

Moderator and Speaker:

James Brody, Esq., Chairman of Mortgage Banking Practice Group
Johnston Thomas, Attorneys at Law, P.C.

Additional Speakers: To be announced

Complimentary Webinar Recordings and Presentation Materials Available from Johnston | Thomas Mortgage Banking

We are pleased to offer complimentary recordings and other presentation materials from our recent webinars:

  • July 26, 2018 – “Loan Officer Compensation Tips and Trends: How to Gain a Competitive Edge While Remaining Compliant” webinar
  • June 28, 2018 – “Repurchase and Indemnification Claims in 2018 and Beyond: A Comprehensive Update” webinar
  • May 10, 2018 – “Mergers and Acquisitions in the Mortgage Banking Industry: Expert Insights and Forecasts for 2018 and Beyond“ webinar

These materials may be downloaded from our Johnston Thomas website or, for more information concerning any of the foregoing webinars and/or the subject matter of these webinars, please contact its Chairman James Brody.

Legal Services Offered by Johnston Thomas in the Mortgage Banking Industry

Johnston Thomas is a full suite boutique law firm, which amongst other practices such as real estate and commercial litigation, has a nationally recognized Mortgage Banking Practice Group. With an experienced team of mortgage banking lawyers (including senior litigation attorneys, former in-house General Counsel and in-house Compliance Counsel from a well-known bank and mortgage company, etc.), certified fraud examiner and forensic underwriters, and an extremely competent support staff, all of whom are dedicated to aggressively and competently serving the needs of our valued clientele, Johnston Thomas’ Mortgage Banking Practice Group is known all across the country for the experience and results that it brings to the areas of regulatory compliance, mortgage banking litigation, and a broad range of mitigation services.

Amongst the many legal services Johnston Thomas offers the mortgage banking industry (e.g., brokers, lenders, servicers, vendors and more), such include, but are in no way limited to, as follows:

  • Mortgage Repurchase and Make-Whole Indemnification Litigation and Mitigation (e.g., Secondary Market Investors, Agencies, etc.)
  • Mortgage Industry Litigation (e.g., Servicer and Sub-Servicer Disputes, 3rd Party Fraud Recovery, CPL and Title Policy Actions, Appraiser E&O Claims, Loan Officer Actions, etc.
  • Mortgage Repurchase and Make-Whole Alternative Dispute Resolution (e.g., Arbitration, Mediation, etc.)
  • Regulatory Compliance, Administrative and Business Services (e.g., Mock Audits, LO Compensation, MSAs, Licensing, CA Dep’t of Business Oversight, HUD Review Board, etc.)
  • Transactional Matters (e.g., Drafting and Negotiating Broker and Correspondent Loan Purchase Agreements, Mergers & Acquisitions, etc.)

Should you have any questions regarding how Johnston Thomas’ Mortgage Banking Practice Group can be of assistance to you and/or your company, please contact its Chairman James Brody and/or its Co-Chair Ingrid Peterson.

Conference Attendance by Johnston Thomas

Johnston Thomas will have a number of its attorneys in attendance and/or speaking at the following upcoming conferences:

  • October 14-17, 2018: Mr. Brody and certain of his colleagues will be in attendance at the MBA’s Annual Convention and Expo in Washington, DC.
  • October 22-24, 2018: Mr. Brody will be speaking as an expert panelist at the American Conference Institute’s 25th Residential Mortgage Litigation & Regulatory Enforcement Conference in Dallas, Texas.

If you or someone from your company will also be in attendance at the foregoing conferences and would like to set up a complimentary appointment to meet with Johnston Thomas’ Mortgage Banking Practice Group, please contact its Chairman, James Brody, to schedule a date and time. We hope to see you there!

Although this communication may contain or possibly be considered attorney advertising, it is meant to be for informational and commentary purposes only. As such, it is not intended as legal advice and does not create an attorney-client relationship. Because of the generality of this update, the information and opinions provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. All opinions expressed herein are solely the opinion of the individual author and do not necessarily reflect the opinions of Johnston Thomas Law Firm, its attorneys, or any other individual.

Copyright © 2018 Johnston Thomas, Attorneys at Law, PC, All rights reserved.

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