You work in the financial industry. You believe but for your beloved industry, the entire world would crumble. The world owes you everything — the people that make your bed, cut your grass, take care of your kids, and build your sports car are simply lucky you get out of bed everyday to make the world run so well. You are entitled to bonuses, every year, shoot every month. You are aware that some in your industry engage in certain practices that are less than ethical, but the market will eventually weed those bad actors out (certainly not government regulation).
There are many costs of doing business, like paying lobbyists, funding PR campaigns, contributing to PACs who contribute to campaigns of elected representatives, attorneys general, and judges — attorney fees are just another line item to defend and settle cases that ungrateful, deadbeat borrowers bring against your industry in order to try to get out of their obligations. You have looked at the math before — you could spend millions in cleaning up your industry and changing practices like honoring obligations, keeping trained staff, develop systems and software that are responsible and efficient, creating lending and servicing models that take away the usual pathetic, albeit true arguments borrowers make time and time again. But for every 10 suits filed, 10,000 borrowers never sue or hardly complain. You have bonuses to give out and vacation homes to buy and you would never want to stray from your obligation to maximize profits for your shareholders.
Sure some media report the problems, but your PR machine explains that the borrowers are mostly to blame, and the lobbyists and PAC money keep real reforms at bay. Every once and awhile you let a bill pass but with plenty of loopholes that gives the representatives the appearance of reform so you can continue on just as before, or you encourage a new government program with a lovable name that has more barriers than borrowers could overcome.
While on your Cayman Island vacation you read a story about legal aid organizations and pro bono programs. You are not too upset that they are underfunded, and help very few who apply. You knew what you were doing when you asked Congress to fund more counselors trained by NeighborWorks to tell the deadbeats to either pay up or get out, rather than fund more legal aid organizations. You certainly hope few if any lawyers volunteer to take a case pro bono because they are or one day will be paid by the industry.
But you are even happier to learn that legal aid and pro bono lawyers mostly continue to help one borrower at a time so you never have to change a thing. While a legal aid or pro bono organization might brag it helped 50 homeowners a year keep their homes — you got your staff to offer settlements that make these homeowners pay as much as they are able, drop claims for punitive damages, injunctive relief, and probably attorney fees. Legal aids go to trainings, pro bono attorneys go to award ceremonies and you clean up year after year. Every time a lawyer takes a sad story case and only looks to fix it for that one client, a financial industry executive gets his wings (or another new sports car). In short, a legal aid or pro bono lawyer who investigates, researches, files suit, completes discovery, briefs dispositive motions, and wins or settles the case to merely prevent a foreclosure ensures nothing changes, so the industry wins — big.
Filed under: Texas