| |
| META TOPICPARENT | name="SecondPaper" |
|---|
|
|
<
< | Jonathan: I did some edits and moving around today; still in progress. I'll continue to add stuff and write feedback over the next few days. Thanks! |
| | |
|
<
< | Class Action Lawsuits to Enjoin Foreclosure: An Argument for Clinical Involvement
-- By JonathanWaisnor - 13 Apr 2010 |
| | |
|
<
< | A Problem: Foreclosures Without Adequate Legal Advising |
>
> | Class Action Lawsuits to Enjoin Foreclosure: An Argument for Clinical Involvement |
| | |
|
<
< | The recent financial crisis has exposed a serious problem: foreclosures without adequate legal advising. Firms which engaged in a pattern of predatory lending, when borrowers are unable to keep up with payments, foreclose the houses right away. |
>
> | I. Excessive Foreclosures and the Massachusetts Model |
| | |
|
<
< | An Approach: The Massachusetts Model |
>
> | The Problem |
| | |
|
<
< | The Fremont Case |
>
> | The recent financial crisis has exposed a serious problem: foreclosures without adequate legal advising. When borrowers are unable to keep up with payments, firm foreclose the houses right away. Often, these are firms which have engaged in a pattern of predatory lending that helped create the problem. |
| | |
|
<
< | In Massachusetts, an interesting model of dealing with the problem has emerged. The Attorney General has obtained an injunction under a consumer protection statute |
>
> | |
| | |
|
<
< | On March 2, 2008, the Attorney General of Massachusetts obtained a preliminary injunction against Fremont Mortgage Group, a mortgage lending firm based in California that held approximately 3,000 loans in the Commonwealth of Massachusetts. |
>
> | A few good statistics would be helpful here to quickly paint a picture. How many foreclosures nationally, how often are the firms foreclosing the same ones that did predatory lending, etc. |
| | |
|
<
< | This action, Commonwealth v. Fremont, was brought under the Massachusetts Predatory Loan Practices Act and the state’s general consumer protection statute (Mass Gen Laws 93A). |
>
> |
|
| | |
|
<
< | The injunction requires Fremont, or any company that purchased a loan from Fremont, to submit these loans for review to the Attorney General's office before foreclosure. |
| | |
|
<
< | The Harvard Law School Predatory Lending Clinic |
>
> | The Fremont Injunction |
| | |
|
<
< | A coalition of faculty-run, student staffed law clinics or externships, pro bono consumer protection attorneys, and unemployed recent graduates could band together to bring these lawsuits on behalf of affected homeowners. Clinics at law schools in every state could work together and with law firms to represent clients in class action suits against lenders to keep many thousands of people at a time from foreclosure. Indeed, Harvard Law already offers a Predatory Lending clinic that works with private practitioners to represent homeowners. |
>
> | In Massachusetts, the Attorney General won an injunction in 2008 to block such foreclosures by Fremont Mortgage Group, a mortgage lending firm based in California that held approximately 3,000 loans in the Commonwealth of Massachusetts. This action, Commonwealth v. Fremont, was brought under the Massachusetts Predatory Loan Practices Act and the state’s general consumer protection statute. The injunction requires Fremont, or any company that purchased a loan from Fremont, to submit these loans for review to the Attorney General's office before foreclosure. |
| | |
|
<
< | http://www.law.harvard.edu/academics/clinical/lsc/clinics/predatory.htm |
| | Results
Judicial bypass will only be granted on a case by case basis, and the cost to Fremont to have an individual case reviewed is so great that one practical effect of the law is a de facto moratorium on foreclosures that keeps 2200 people in their homes for the foreseeable future or allows them to renegotiate the terms of their mortgages on very favorable terms. |
|
>
> | The benefit from a preliminary injunction to a homeowner is twofold: first, even if the suit is ultimately defeated and the foreclosure recommenced, the owner will have bought time to find a new job, secure new living accommodations, or simply blunt the effect of such a massive life change on his family. Second, it puts pressure on the lender to settle and renegotiate the terms of the lease, as long as the money gained from renegotiating is greater than the sale of the house minus the cost of fighting the suit.
Some data about the benefits would be helpful here. Without that data, in current form (especially the second paragraph), it has the feel of a discussion of the theoretical benefits the injunction could bring rather than empirical observation of results obtained.
As of Spring 2010 (or as recent as possible), are those 2200 people still in their homes? What is the year and source of the 2200 figure?
II. Replicability
Investors and mortgage lenders in the Commonwealth and all over the country are bracing for more lawsuits, afraid that other state governments may try to follow the Massachusetts precedent. To bring one of these suits, a plaintiff would need an applicable consumer protection statute and a lawyer willing to take the case. Although the Massachusetts Predatory Loan Practices Act is particularly plaintiff-friendly, other states have similar statutes that provide for causes of action and equitable relief against predatory lenders.
Why is the MA law particularly plaintiff friendly? What other states have similar statutes and in what ways are they different?
How do we know mortgage lenders are afraid? Is there really a significant probability that other AGs will do this? Have they? Fremont was in 2008. What has happened since, both in MA and elsewhere?
The Limits of Attorneys General
In Fremont, the Attorney General's Consumer Protection Office acted on behalf of the Commonwealth of Massachusetts and the homeowners who had been subject to predatory lending practices. However, Attorneys General will likely not be able to provide the all of legal services required in this field. Logistical concerns alone preclude them from doing so.
However, there are also potential political barriers. Mortgage companies and other lenders generally have a great deal of influence on state government and spend freely during Attorney General election campaigns. There may also be a political backlash by state residents who do not wish to see their state intervening to "bailout" people they perceive to be undeserving.
|
| | |
|
<
< | Lawsuits against mortgage lenders and banks are on the rise, but still the number of plaintiffs is not even close to the number of people who could possibly have a cause of action against a mortgage lender like Fremont. |
>
> | Providing some evidence would be helpful here. |
| | |
|
<
< | Often the plaintiffs ask for money damages, but also for renegotiation of the terms, injunctions stopping foreclosure, or striking of particularly unconscionable provisions. |
>
> |
|
| | |
|
<
< | The cases can take years to resolve, but if a preliminary injunction is granted, the plaintiffs can begin to see immediate benefit in being able to stay in their homes, at least temporarily. Often the lender will simply settle or renegotiate to avoid the costs of protracted litigation. Use of these lawsuits can radically shift the balance of power between an individual borrower and his credit holder. As we saw in Fremont, breaking up the mortgage and selling it off to others is no defense to an injunction. |
>
> | The Role of Private Practitioners |
| | |
|
<
< | The benefit from a preliminary injunction to a homeowner is twofold: first, even if the suit is ultimately defeated and the foreclosure recommenced, the owner will have bought time to find a new job, secure new living accommodations, or simply blunt the effect of such a massive life change on his family. Second: it puts pressure on the lender to settle and renegotiate the terms of the lease, as long as the money gained from renegotiating is greater than the sale of the house minus the cost of fighting the suit. |
>
> | Lawsuits such as Fremont have sometimes been brought by private practitioners, usually representing a single client. Class action lawsuits have also appeared in different jurisdictions- with these suits, it is possible to completely stop a company from foreclosing on any household that purchased a toxic loan. |
| | |
|
<
< | Generalizability |
>
> | However, if attorneys don’t think they have a chance at winning, or think that the expected payout on the lawsuits doesn’t justify the time or expense, they will not want to take on the lenders or might settle too quickly. |
| | |
|
<
< | Investors and mortgage lenders in the Commonwealth and all over the country are bracing for more lawsuits, afraid that other state governments may try to follow the Massachusetts precedent. |
>
> | |
| | |
|
<
< | To bring one of these suits, a plaintiff would need an applicable consumer protection statute and a lawyer willing to take the case. |
>
> | I think an assessment of the role of private practitioners is an important part of the argument you want to make, but I think you need more backing it up and you need to get more precise. |
| | |
|
<
< | Although the Massachusetts Predatory Loan Practices Act is particularly plaintiff-friendly, other states have similar statutes that provide for causes of action and equitable relief against predatory lenders. |
>
> | This section could use some evidence. Especially: "usually representing a single client," "have also appeared in different jurisdictions" "it is possible" "if attorneys don't think" "they will not want to take on the lenders or might settle too quickly." |
| | |
|
<
< | Lawsuits such as Fremont have sometimes been brought by private practitioners, usually representing a single client. Class action lawsuits have also appeared in different jurisdictions- with these suits, it is possible to completely stop a company from foreclosing on any household that purchased a toxic loan. However, if attorneys don’t think they have a chance at winning, or think that the expected payout on the lawsuits doesn’t justify the time or expense, they will not want to take on the lenders or might settle too quickly. The major benefit of having the Attorney General’s office bring the case is that money is somewhat less of an issue, keeping homeowners in their homes provides a good public relations boost for that particular Attorney General. |
>
> |
|
| | |
|
<
< | Prospects for New York |
>
> | III. The Role of Law Students: A Clinic at Columbia? |
| | |
|
<
< | In New York, Banking Law 6-l has provided a cause of action for predatory lending (DLJ Mortgage v. Smith). Under an adequate consumer protection statute, the plaintiff would need a lawyer willing to take the case and see it through to the end. |
>
> | Perhaps a clinic, or a temporary project closely resembling a clinic, could be introduced here at Columbia. A coalition of faculty-run, student staffed law clinics or externships, pro bono consumer protection attorneys, and unemployed recent graduates could band together to bring these lawsuits on behalf of affected homeowners. Clinics at law schools in every state could work together and with law firms to represent clients in class action suits against lenders to keep many thousands of people at a time from foreclosure. Indeed, Harvard Law already offers a Predatory Lending clinic that works with private practitioners to represent homeowners. |
| | |
|
<
< | In Fremont, the Attorney General's Consumer Protection Office acted on behalf of the Commonwealth of Massachusetts and the homeowners who had been subject to predatory lending practices. It is unwise to rely on similar action by attorney’s general in other states. For one, banks and other lenders may spend enormous amounts of money to ensure the election of AG's who avoid these types of lawsuits. Taxpayers may not want their money being used to bail out people, even neighbors, who they consider to have acted unwisely. |
| | |
|
>
> | |
| | |
|
>
> | You might want to do some digging and assess what, if anything, the HLS clinic has achieved in terms of preventing foreclosures, and how the clinic is funded. |
| | |
|
>
> | You may want to engage with the issue that existing faculty here at CLS don't have any incentive to do this, and CLS doesn't have much money to hire any additional staff. Unemployed recent graduates still need to be paid by someone - although deferred associates may have a stipend, and many in that category are still looking for work. The problem would be the cost of supervision. How do we finance that? Also, law firms may decided to defer less people in coming cycles (paying people to do nothing for them is not desirable for them). |
| | |
|
>
> | From a perusal of their website, it appears that Harvard's program is part of a legal services center sponsored by Wilmer Hale. Perhaps law firm sponsorship could provide funding here as well? |
| | |
|
>
> | Pro bono work of alumni or other lawyers could be a source of work. But it wouldn't necessarily be sustainable or reliable, and may not be much available given the recession. |
| | |
|
<
< | A Columbia Law School Clinic or Project? |
>
> | But the core idea of a clinic implies current CLS students doing work on this cases, and that can't be done without supervision, which must be funded. |
| | |
|
<
< | Perhaps a clinic, or a temporary project closely resembling a clinic, could be introduced here at Columbia. |
>
> |
|
| | |
|
<
< | A coalition of faculty-run, student staffed law clinics or externships, pro bono consumer protection attorneys, and unemployed recent graduates could band together to bring these lawsuits on behalf of affected homeowners. Clinics at law schools in every state could work together and with law firms to represent clients in class action suits against lenders to keep many thousands of people at a time from foreclosure. Indeed, Harvard Law already offers a Predatory Lending clinic that works with private practitioners to represent homeowners. |
>
> | Supply of Talent |
| | |
|
<
< | Spots in Columbia's clinical program are in high demand, reflecting a desire of students for more hands-on legal education. The law school should expand its clinical program, including unemployed or deferred recent graduates into the mix, and the current state of the legal job market may force them to do this. Clients are becoming aware of a new balance of power in the legal services market, and they no longer want to pay for inexperienced associates, a problem for firms who are used to training their associates during the first few years on the job. If firms value graduates with better legal writing, research, and judgment than they are getting now, and students demand more clinical experience, the law school will have no choice but to offer these programs. When that happens, law students across the country could play a significant role in repeating the success of the Fremont lawsuit. |
>
> | Spots in Columbia's clinical program are in high demand, reflecting a desire of students for more hands-on legal education. The law school should expand its clinical program, including unemployed or deferred recent graduates into the mix, and the current state of the legal job market may force them to do this. Clients are becoming aware of a new balance of power in the legal services market, and they no longer want to pay for inexperienced associates, a problem for firms who are used to training their associates during the first few years on the job.
Skills Training
If firms value graduates with better legal writing, research, and judgment than they are getting now, and students demand more clinical experience, the law school will have no choice but to offer these programs. When that happens, law students across the country could play a significant role in repeating the success of the Fremont lawsuit.
"law students across the country could play a significant role in repeating the success of the Fremont lawsuit"
I think this statement could use some more evidence. In the section on the role of law students, you argue that students want to do clinical work, and that CLS should provide them more clinical opportunities. In sections above, you argue that people being foreclosed need good lawyers. I think there are further analytical steps between those two propositions that need to be filled in.
The logistical barriers to setting up a new clinical program are significant. Providing reliable legal advice to people who will depend on it is a formidable undertaking, and the law school doesn't seem to have much in the ways of resources to provide supervision, space, or funding for such a project.
Also, there hasn't been much evidence introduced for the proposition that the Fremont case is replicable in other states (or evidence about the precise results of the Fremont case itself in MA). Adding some of that in would help.
"If firms value graduates with better legal writing, research, and judgment than they are getting now, and students demand more clinical experience, the law school will have no choice but to offer these programs."
I'm not sure this sentence does much analytically. I think it basically says: if firms demand more clinical training and students demand more clinical training, then the law school will eventually offer more clinical training. I'm not sure there is anyone who would dispute this.
It might be interesting to engage with why firms haven't been demanding more clinical training in the past. Also, are they demanding it more now? I am not sure. Why haven't students demanded it more in the past? Are they now?
|
| |
General Comments |
|
>
> | Links |
| | One thing that I think would be generally helpful would be to make more use of linking; the original didn't have any links. The purpose is not necessarily to cite sources for the sake of citing sources, but to connect the reader to other resources that might interest her. The web, and wikis in particular, are media that are designed to facilitate these kinds of links. |
|
<
< | Another area where there is room for improvement is giving more of a big picture sense of the problem and potential solutions. A reader learns that there is some sort of foreclosure problem in MA, and that MA has a law that could help, and then there's a discussion of how Columbia could add a new clinic, since there's a high demand here for clinical training. I think the dots could use some more connection. |
>
> | I've added some links to some of the legal materials you mention. But, it might be helpful to add in links to some of the sources that you used for other points. |
| | |
|
<
< | Starting "in media res" with a description of the Massachusetts injunction has a certain zip to it, but I think starting out with a description of the broader problem may help orient a reader who is not familiar with litigation in this area. |
>
> | Precision and Use of Evidence
My edits have primarily focused on clarity and structure. I have tried to help articulate what I took to be your core points. I don't have a particularly strong knowledge of this topic, so I'm not in a great position to evaluate the particular merits of your analysis and proposal. |
| | |
|
>
> | However, I think the piece would be strengthened by more use of evidence and more precise statements rather than generalization. For me to research these issues and fill in the piece with cites would I think exceed the scope of the editorial role. However, I've marked areas where you may wish you to add supporting evidence of some sort (and ideally links). |
| | |
|
>
> | The Big Picture |
| | |
|
<
< |
You are entitled to restrict access to your paper if you want to. But we all derive immense benefit from reading one another's work, and I hope you won't feel the need unless the subject matter is personal and its disclosure would be harmful or undesirable.
To restrict access to your paper simply delete the "#" on the next line: |
>
> | Another area where there is room for improvement is giving more of a big picture sense of the problem and potential solutions. A reader learns that there is some sort of foreclosure problem in MA, and that MA has a law that could help, and then there's a discussion of how Columbia could add a new clinic, since there's a high demand here for clinical training. I think the dots could use some more connection. |
| | |
|
<
< | # * Set ALLOWTOPICVIEW = TWikiAdminGroup, JonathanWaisnor |
>
> | Starting "in media res" with a description of the Massachusetts injunction has a certain zip to it, but I think starting out with a description of the broader problem may help orient a reader who is not familiar with litigation in this area. |
| | |
|
<
< | Note: TWiki has strict formatting rules. Make sure you preserve the three spaces, asterisk, and extra space at the beginning of that line. If you wish to give access to any other users simply add them to the comma separated list |
| | \ No newline at end of file |
|
>
> | In a sense, you have a good big picture down already: you have identified a significant problem, an approach to solving it, and a way to generalize that solution. I think your efforts would be strengthened however, by adding some more precision to your statements about these elements and adding some more evidence to support your analysis. |