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The Challenges in Financial Services

Editor's note: This feature originally appeared in the November issue of DS News.

John Ansell III holds a Bachelor of Arts degree from the University of Maryland and a Juris Doctor from the University of Pittsburgh School of Law. Ansell’s practice focuses primarily in the areas of real estate law and litigation, settlements, foreclosure, bankruptcy, and default litigation legal services. He oversees the firm’s appellate practice and jointly oversees the firm’s REO practice.

Ansell serves as a panelist at numerous default industry events, regularly provides educational training sessions to firm clients, and contributes articles for industry-related publications. Ansell is admitted to the state courts in Maryland, Virginia, and the District of Columbia, the United States District Court for Maryland, and the District of Columbia and the Eastern and Western Districts for the United States District Court for Virginia. He is a member of the Maryland State Bar, Virginia State Bar, and District of Columbia Bar Associations. Ansell spoke to DS News earlier this year during the Legal League 100 Servicer Summit, discussing the challenges facing the industry, how law firms can best work with servicers, and more.

What is your main takeaway from the Legal League Summit events?

Much of it is simply learning that we’re not alone in this. The challenges we face are nationwide. They’re not specific to judicial states or nonjudicial states—they exist across the board. Figuring out the common threads helps strengthen us as an industry. My firm operates in Maryland; Washington, D.C.; and Virginia, so we run the gamut of judicial, nonjudicial, and “quasi-judicial.” What judicial entails in D.C. is very different from the judicial process in New York. The nonjudicial process in Virginia is going to be very different from other states’ nonjudicial processes. But there are common threads and common challenges. Being able to share information and strategies among different firms and different geographic regions helps.

Also, making connections and getting to know people on a personal level is critical. I can email someone 20 times, but I will never get the sense of knowing them that I can from sitting across from them for five, 10 minutes. Having dinner, having a drink, whatever the case may be. I couldn’t even tell you how many times I’ve met someone from a servicer at a conference, and then, lo and behold, a month later an issue arises with that servicer. Then I can pick up the phone and call that person. These summits facilitate communication and speed up that communication process.

What are some of the biggest issues facing the industry right now?

One universal theme right now in the industry is that volumes are down. When volumes were increasing, it was easy. It was an expanding pool, so everyone could get a share. With a decreasing pool of files, everyone has had to streamline their operations. You have to look at every discreet aspect of your operation to make it more efficient and eliminate any duplication of effort. The investors are squeezing the servicers, pushing for faster resolutions and greater returns at a lower cost. The servicers are doing the same to the law firms. Meeting those challenges in a way that still allows you to provide good service and operate a business is the challenge. We have an obligation to provide the best service we can provide for our clients.

What recent legislation or cases do you think have the potential to impact the industry in a significant way?

Virginia has made very few statutory changes to the process since I’ve been practicing law for the last 15 years. Maryland, on the other hand, adds new wrinkles every year, or every other year.

It’s a challenge adapting to those changes, update our clients on the changes, adopt the processes, program our system, and so on. The addition of one line in a statute might require a large amount of programming that we need to do on our end, and we also need to advise the clients. Then they need to update their processes and procedures, and we need to do the same. Small statutory changes can produce enormous ripple effects across the firms and servicers. There is a bill pending in the U.S. House that would exempt attorneys in judicial states from the Fair Debt Collection Practices Act (FDCPA).

We’re hopeful that it goes through. As attorneys, we have an ethical obligation to treat the borrowers with a certain level of professionalism, and our ethical responsibilities go to all parties. Unfortunately, while the FDCPA has good intent, all too often it’s used as a weapon to extract fees from us. Just about every firm in this industry has faced that at some point. Some of the class-action attorneys will try to take three words out of one letter and say, “This is deceptive,” and try to extract large fees as a result.

Has a move toward more digital infrastructure and recordkeeping changed those problems at all, or is it still a matter where one wrong word on the page can create huge problems?

As an attorney, every communication that you generate is still subject to all the same ethical requirements that they were 30 or 40 years ago. The difference is now those communications can be disseminated instantly to large numbers of people. If a law firm were to send out something that had confusing or deceptive language, someone could take that communication and instantly transmit it out into the world, where you instantly become a target. But I don’t think technology has fundamentally affected the nature of our communication as attorneys. We still strive to meet the requirements of every statute that we have to operate under. We still have ethical obligations to every court we practice in that our communications are truthful and correct.

What are some of the ways that firms can best work with their servicer partners?

The key is communication. When issues arise, we need to communicate effectively to the clients, and vice versa. When the client is aware of an issue, they need to communicate that to us, so that we can look out for that issue. We’ll review every file the same way, but if a client comes to us and says, “We’ve received communication from an attorney on this file, and they have an issue with X,” we’ll know that X is potentially an issue and we’ll give it extra attention. Communication is crucial when we know there’s an impending HUD-first legal deadline. We’ll have some clients who say, “We’re going to be referring a file to you in a couple of days. It’s got a first legal deadline at the end of next week.” Knowing that it’s out there helps. It works both ways. If we get a call from an irate borrower, whether it’s justified or not, we need to let the servicer know that there might be an issue and they need to reach out to that borrower.

About Author: David Wharton

David Wharton, Editor-in-Chief at the Five Star Institute, is a graduate of the University of Texas at Arlington, where he received his B.A. in English and minored in Journalism. Wharton has nearly 20 years' experience in journalism and previously worked at Thomson Reuters, a multinational mass media and information firm, as Associate Content Editor, focusing on producing media content related to tax and accounting principles and government rules and regulations for accounting professionals. Wharton has an extensive and diversified portfolio of freelance material, with published contributions in both online and print media publications. He can be reached at [email protected].

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