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Servicers and Regulators Map Out Post-Moratoria Framework 

On Wednesday, Legal League 100 held its Spring Servicer Summit, a virtual experience featuring informative discussions focusing on the key issues and hot-button topics impacting all involved with the mortgage default and servicing industry.  

Legal League 100 Chair Roy Diaz, Managing Shareholder of Diaz Anselmo & Associates P.A., kicked off the day’s events, highlighting the day’s agenda and introducing the opening discussing “The State of the Industry & Market.” 

“The State of the Industry & Market” featured a panel of thought leaders representing the servicing community discussing the current state of the industry and the foreclosure market, from how default work has changed in light of foreclosure moratoria to compliance challenges and more. 

Moderated by J. Anthony Van Ness, Founder, Managing Partner for the Van Ness Law Firm, among the panelists providing their market update were Sasha Cohen, First VP of Default Administration for Community Loan Servicing; Tom Croft, SVP, Default Management for Carrington; Rita M. Falcioni, Central Office Loan Management Supervisor in Loan Guaranty Service for the U.S. Department of Veterans Affairs; Dean Meyer, Director, Loss Mitigation, Single-Family Servicing Operations Management for Freddie Mac; and Courtney Thompson, Founder of Consigliera. 

“Every servicer's main goal at the moment is to help anyone who had a hardship due to COVIID have the opportunity to have that hardship resolved,” said Cohen. “Once we do all of that and foreclosure is the only option we then seek, we are going to then, review all of the documents and files extensively. The name of the game is ‘document, document, document.’” 

The panel continued and detailed the many ways in which the servicing industry has been working with consumers, guiding them through the forbearance process and positioning for a beneficial outcome.  

Moderated by Diaz, the “Leadership Forum” featured a discussion by representatives from the Legal League's Advisory Council covering how firms are diversifying their business as moratoriums will impact foreclosure timelines, and how the Legal League 100 is assisting its members. Participants sharing their insight included Legal League 100 Vice Chair Stephen M. Hladik, Partner with Hladik, Onorato & Federman, LLP; and Legal League 100 Advisory Board Members Jane Bond, Managing Partner with McCalla Raymer Leibert Pierce; Caren Castle, Senior Mortgage Servicing Attorney with The Wolf Firm, A Law Corporation; Daniel C. Chilton, Partner with Robertson, Anschutz, Schneid, Crane & Partners, PLLC; Chad A. Neel, Chief Executive with McCarthy Holthus; and Neil Sherman, Esq., President, Managing Partner Default Operations with Schneiderman & Sherman P.C. 

“We certainly know that the CFPB laid out the expectations of the servicer and how they are following through,” said Hladik. “The CFPB is setting the stage right now with information gathering … they want to see numbers and want to know what percentages of loans are in default, if they are concentrated in a particular area. We have to also examine what type of things the CFPB is going to do. They will be more active and take a closer look at this, but what kind of coordination are they doing at the state regulatory level?”  

An open line of communication between servicers and regulators will only benefit consumers in the post-moratorium era, as continued education and guidance will be needed as more exit their forbearance plans. 

The third session of the day "Navigating the Impact of Foreclosure Delays,” examined how servicers are planning for borrowers as they come out of forbearance plans, how they will re-start customer files, and maintaining compliance in the face of different state and national regulations. 

Moderator Ryan Bourgeois, Partner with Barrett, Daffin, Frappier, Turner, and Engel led the discussion featuring ReNee D. Brooks, Esq., VP, Legal Risk for Truist; Ron Deutsch, Partner with Cohn, Goldberg & Deutsch, LLC; Amy Neumann FVP, Director of Late Stage Delinquency for Flagstar Bank; and Ramie Word, SVP of Default Servicing for Mr. Cooper. 

With a wave of homeowners preparing to exit forbearance plans and workouts, the servicing industry may be faced with staffing issues in dealing with the volume of customers on the horizon. 

“One of my concerns echoed by everybody on the panel is that prior to COVID, default volumes were at their lowest in recorded history,” said Neumann. “What we are up against now is not only having to scale to pre-COVID numbers, but scale up from there. Where are we going to find the talent? A lot of the talent handling this business over the past year, just through attrition, has left the business and have gone on to other careers.” 

Firms and servicers are now faced with the task of backfilling staffing holes and handling a rise in volume as the moratoria comes to an end.  

The "Understanding Default and Foreclosure Compliance" session followed and was led by Graham H. Kidner, Associate General Counsel for Fannie Mae, examining the CFPB’s proposed final rule amending the Mortgage Servicing Rules, what servicers should be doing in response to the Bureau’s April 1, 2021 Compliance Bulletin, and navigating legal challenges from borrowers post-forbearance. The panel featured input from Robert D. Forster, II, Managing Partner with the BDF Law Group; Bernard C. John, Senior Counsel with PNC Bank, N.A.; Beth M. Northrop-Day, Assistant General Counsel, VP for U.S. Bank; and Chris Santana, SVP, Default Servicing with PennyMac Loan Services, LLC. 

Servicers are faced with having to deal with a number of mandates and executive orders from regulators, in essence, changing existing rules on the fly, and servicers have the difficult task of juggling these changes and are forced to make sense of them.  

“Just as many of us have done since the beginning of the pandemic, we’ve had to interpret, pivot and address business operations in what we believe to be compliant with the proposed rules or an executive order, or an order from the court,” said John. “We have never had to deal with such unprecedented information flying in at a given time that is ultimately up for interpretation.” 

The final session of the day dealt with bankruptcy, including the modification of loans during bankruptcy, managing bankruptcy timelines, and the best ways to utilize bankruptcy as an alternative to foreclosure. 

Led by moderator Kristin A. Zilberstein, Supervising Attorney Bankruptcy for the Padgett Law Group, bankruptcy experts Michelle Garcia Gilbert, President/CEO of Gilbert Garcia Group, P.A.; Allen C. Myers, Assistant General Counsel, VP for JPMorgan Chase Bank NA; and Sarah Tullie, VP of Bankruptcy for Wells Fargo. 

“The key is communication … communicate as frequently as we can,” said Myers. “The CFPB wants to put a real focus on avoiding avoidable foreclosures. We want to find every foreclosure out there and do whatever we can whether that is through a loan modification, deferral, and agreed order … we want to explore every avenue.” 

Sponsors of the event included Padgett Law GroupProvana, and DS News. 

Click here for more information on the Legal League 100 Spring Servicer Summit Virtual event, which can be viewed by registered attendees for the next 90 days. As part of the 2021 Five Star Conference and Expo at the Hyatt Regency Dallas, Legal League 100 will be holding its in-person Fall Servicer Summit event on Monday, September 20 where the nation’s elite financial services law firms will be discussing default policies, procedures, and hot-button issues with leading servicing executives. 

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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