Litigators advise financial institutions to shore up mortgage data
Financial institutions are dealing with an influx of changes on how litigators, regulators and judges in predatory lending cases evaluate the actions of mortgage lending and servicing firms, legal experts said Wednesday. As banks wait for the Consumer Financial Protection Bureau to define a qualified mortgage and shape the ability-to-pay requirement outlined in Dodd-Frank, litigation attorneys are advising financial firms to focus on shoring up mortgage data. Attorneys speaking on a panel at the America Conference Institute's Residential Mortgage Litigation & Regulatory Enforcement Conference said accurate, trackable data functions as an integral part of any financial firm's defense in civil litigation cases. "There is a way to strengthen your hand in how you track data," said Eric Jon Taylor, a litigator with Parker Hudson Rainer & Dobbs. Taylor said missing data only hurts a case, while data tracked properly allows litigators to shape their cases using specific details to support a firm's decision to refinance or originate a mortgage. With this in mind, it's essential for lending institutions to know exactly how their loans are originated, serviced and tracked, Taylor said. He added any firm failing to track every aspect of a loan's life cycle is behind the times and behind the government and other agencies, which are careful in tracking this information. At the moment, commercial litigators say it's too soon to worry about how the CFPB will define ability to repay or abusive lending standard provisions outlined in Dodd-Frank. While the new standards could create new legal liabilities for lenders who issue loans to borrowers who lack the ability to repay the loan, Richard Gottlieb with Dykema Gossett PLLC believes a pragmatic approach will eventually be adopted. But he doesn't expect to see anything on the abusive lending standard until 2012. Write to Kerri Panchuk.