Wall Street investment banks have distanced themselves from the loan originations and further distanced themselves from the purchase and sale of loans. The lawyers who represent the players in the chain have succeeded, up till now, in distancing themselves from the collection and enforcement practices emanating from their own firm. The CFPB has filed suit against a law firm for violating the laws regarding these “services”. It turns out that the very thing that the lawyers were seeking to accomplish is illegal. What a surprise.
The lawyers, knowing that the loans and the transfers of the loan were riddled with fatal defects, use non-lawyer personnel to process the enforcement or collection. That way, they reasoned, nobody can say that they did anything wrong because they didn’t do it. But it turns out that allowing your personnel to make it appear that the contact is with a lawyer is illegal — something I pointed out to Tiffany and Bosco (and their father and son jets) back in 2008.
This is going to be interesting, because if the ruling is what I think it will be, then lawyers won’t be able disclaim responsibility for proffering evidence that they knew or should have known was false. The net effect on their license and their liability could be profound. No lawyer is going to risk the rest of his career for the banks if what the bank is asking him to do is use false information.
The lesson in all events is that if you are talking to someone from a law firm you should ask if they are a lawyer. If they are not, tell them you only want to speak with the lawyer. I usually add that if I don’t get a call back from the lawyer within 30 minutes, I will take action. I always get the call.
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