Defending the Industry: A Handful of Veteran Lawyers Say This Industry Falls Victim to Plaintiffs' Attorneys More Often Than Not Because Laws and Regulations Governing It Are Antiquated. Here's Their Brief on Some Thorny Issues, Including Predatory Lending Laws, RESPA Reform and Appraisal Fraud

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THE INNOVATION THAT HAS TRANSFORMED THE mortgage industry in the last decade has far outpaced the dated infrastructure in place to govern it. Will it ever catch up?

Probably not anytime soon, say a few who should know.

That is the view of a handful of the nation's small cadre of attorneys who specialize in serving the mortgage industry. One of the group lobbies on behalf of the nation's mortgage bankers. The others specialize in advising lenders on how to comply with regulations and in defending them against a growing number of lawsuits.

For these attorneys, the consensus is the mortgage industry faces a regulatory and legal system badly out of date. The sense is the industry has evolved to where it now operates "coast-to-coast" and serves as a huge and pivotal component of the economy--especially over the past four years. And not just that: The industry has put tens of thousands of homes in the hands of first-time buyers who just a decade ago probably wouldn't have been able to touch the mortgage marketplace. They say it is time for the system of laws and regulations that govern it to come of age.

Integral to that recognition, they say, is understanding that the industry needs stronger federal legislative leadership on predatory lending that would put pre-emptive federal wherewithal on the books. An example of how this would help is in the area of predatory lending laws where an overwhelming number of state and local laws have been passed that conflict with one another. A federal law that pre-empts the patchwork of state and local laws would greatly assist national lenders in their efforts to comply with predatory lending restrictions.

Modernizing the oversight of the industry also might include strengthening the regulatory power of federal agencies such the Department of Housing and Urban Development (HUD)--at least that is what some of these legal experts suggest. There is the sense among some of these attorneys that it could be beneficial for HUD to more forcefully lead in the regulatory arena.

What would be the goal: Creating an even playing field of sorts among all the varying financial regulators who have their hands in the mortgage lending arena. Of course, those range from the agencies that currently have federal pre-emptive powers--those overseeing federally insured depository institutions, such as the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS)--to those that either don't have or don't fully use the pre-emptive powers they do have.

Finally, part of this desire for a more modern form of oversight adds up to being more precise in the wording and intent of both legislation and regulation. In the past, the lack of both has opened the industry unnecessarily to lawsuits targeting gray areas left in the aftermath, these attorneys say.

Who are these veteran industry advocates? A handful who have honed their knowledge and abilities in the industry since the early 1990s and before, when plaintiffs' attorneys first discovered that mortgage bankers made for tempting targets--and multimillion-dollar payouts, no matter how frivolous the matter litigated.

Among them: Robert Lotstein, 43, managing partner of Lotstein Buckman LLP, Washington, D.C., and founder of iComply[R] Inc., an online "one-stop shop" for those who need to follow all the laws and regulations pertaining to mortgage banking nationwide (, 202-237-6000); Mitchel "Mitch" Kider, 48, and James A. Brodsky, 60, managing partner and founding member, respectively, at Weiner Brodsky Sidman Kider PC, Washington, D.C. ( and, 202-628-2000); and Paul Schieber, chairman of the consumer financial services and retail banking group, and resident in the Philadelphia office of Blank Rome LLP, a firm with 11 offices nationwide in eight states (schieber@blankrome. …


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