President’s Message:
Challenges This Year Require Member Participation

Robert Finlay, Esq.
2011 UTA President

By T. Robert Finlay, Esq., Wright Finlay & Zak, UTA President

When I joined the UTA Board 2 years ago, I had no idea how much I would learn, how exciting it would be or how many truly dedicated industry advocates I would meet.  Of course, the excitement is a mixed bag as it seems that the trustee industry is besieged by attacks from all angles. Some legislatures appear to want to make it almost impossible to nonjudicially foreclose, while others would like to do away with nonjudicial foreclosures all together.  Attorney General offices throughout the country are investigating the foreclosure process.  Meanwhile, Nevada his just figured out that it was supposed to have been licensing trustees for years.  Borrowers are suing trustees and their servicing clients as an alarming rate, both on a loan-by-loan and class action basis.  Not to be left out, mandatory mediation processes in Nevada and Orange County are bringing foreclosures to a halt without any real evidence that they are helping the borrower get a loan modification. 

While I would like to take the approach of any new President and blame all our troubles on the past President, I can’t do that to Rande and it wouldn’t be true.  As challenging as 2009 and 2010 were, 2011 is likely to be the trustee industries’ most challenging year ever.  To combat the onslaught of legislative and legal attacks, I have one word for everyone – participate!  Participation can simply mean attending an educational session or dinner, reading the ENews updates and UTA Quarterly from cover to cover or joining the UTA if you are not a member.  It can also mean writing an article, attending the March 15th Lobby Day, contributing money to our Legislative and Amicus efforts, or helping prepare the educational materials.  And, of course, participation means attending the Annual Conference, November 13-15 at the Red Rock Casino in Las Vegas.  It doesn’t matter how we choose to participate, as long as we all contribute in some fashion. 

The value of participation cannot be more evident than in the UTA’s collective accomplishments last year.  From UTA’s victory on the 3 Arch case – through the excellent work of our counsel, Phil Adleson – to the Mabry decision and donations made to our Amicus program led by our Legal Resources Chair and Vice President, Martin McGuinn, UTA reaped huge benefits for all trustees.  Likewise, our lobbying efforts last year in Oregon and California shot down potentially devastating bills, while we lessened the negative impact of several bills in other states.  Last but not least, we had record attendance at not only the Annual Conference, but also the local dinners in Orange County, San Diego, LA , Phoenix, and Las Vegas.  We need more of the same this year to address many of the issues on our horizon, some of which are highlighted below:

1. Nevada Licensing (Part 1) – Last summer, Nevada’s Financial Institutions Department (FID) sent Quality Loan Servicing a Cease & Desist letter asking them to cease all foreclosure activity until they are licensed by the State of Nevada as debt collectors.  Quality challenged the letter and the FID set a briefing schedule followed by a hearing on December 13th.  The UTA retained Wright, Finlay & Zak, LLP to file an Amicus Brief on the industry’s behalf.  Unfortunately, the FID Commissioner refused to accept our request.  Clearly, they do did not want to have all the facts in front of them.  At the hearing, the Commissioner extended the stay of enforcement and ordered additional briefing.  A decision is due in early February.  The same battle is being waged in the Courts, with the UTA filing an Amicus Brief in the Maves appeal on the same issues.
   
   
2. Nevada Licensing (Part 2) – There is a significant chance that the Commissioner will rule against Quality, finding that it must be licensed by Nevada as a debt collector.  The ruling would presumably apply to all trustees.  The next test is in April.  To be eligible for the test, there is a detailed application process.  One must then study for the test, which I am told is not a simple process.  Given the potential of an unfavorable ruling, trustees may want to consider getting licensed as soon as possible. 
   
   
3. Bank of America’s Injunction– As many of you may have heard, a Judge in Nye County issued a preliminary injunction on an ex parte basis putting a halt to all Recontrust foreclosures in Nevada.  The injunction was subsequently dissolved in Federal Court, but it goes to show us how impulsive and anti-foreclosure some of the judges in Nevada (and elsewhere) are.  FYI – Nevada licensing was one of the original issues raised in the North v. Recontrust case.  It was later dropped in favor of an argument that the agent of the beneficiary could not sign and record the NOD.
   
   
4. Sunset of 2923.52-54 - In summary, these statutes mandated an additional 90 days between the NOD and NOS, unless the servicer has an exempt loan modification program.  As you know, most major servicers obtained the requisite exemption from one of the governing departments.  The law sunsetted on January 1st.  The effect of the sunset on pre-2011 NODs has been the subject to much debate.  Unofficially, the three governing Departments have told the UTA’s Corporate Counsel that they agree that 2923.52 - .54 do not have to be complied with starting on January 1st.
   
   
5. Attorney General Letter – As many of you may already know, California’s Attorney General sent a letter to a selected few California trustees inquiring into their foreclosure practices.  On behalf of the UTA, Martin McGuinn, Phil Adleson and myself hosted a conference call with the AG’s office to educate the AG on the role of trustees, discuss the goal behind the AG’s letter and see how the UTA can work with the AG’s office to satisfy its investigation.  Although the AG’s office held its cards close to its chest, the call was very productive.  The AG confirmed that letters were sent to only a select few trustees; but, did leave open the possibility of additional letters in the future.  The AG’s office asked lots of questions about the non-judicial foreclosure process.  In the end,  I believe that the call was the first step of many in educating the AG’s office in the role of a trustee in the non-judicial foreclosure process. 
   
   
6. OC Mediation Program – Last year, the Orange County Courts instituted a mandatory mediation program on all foreclosure-related lawsuits filed in Orange County.  The program does not impact every foreclosure in Orange County, just those where the borrower sues the lender or trustee.  Trustees are, for the most part, relieved from participating in the mediations.  That said, many of your servicing clients may ask you about the program.  If they do, here’s the latest.  Judge Firmat has instituted an automatic 90-day stay on all new cases where the borrower requests a Temporary Restraining Order (TRO).  Unfortunately, I believe the automatic stay will result in more TROs; which, in turn, will result in more delays to the foreclosure. 
   
   
7. What’s Next?  - Bills have already been introduced in Oregon and Washington ranging from mandatory mediation to requiring trustees to confirm possession of the original note to practically abolishing the non-judicial process.  In Los Angeles on January 31st, the Senate Banking, Housing and Judiciary Committee held a hearing where all they seemed interested in is forcing the lender to prove ownership in the note.  New CA bills are currently under debate.  Adding to our concerns is that our new AG may be less business friendly than Jerry Brown.  In addition, our new Governor (Jerry Brown) is likely to be less business friendly than Arnold. 
   
   
8. UTA Lobby Day – In light of the anticipated new bills, lobbying will be more important than ever.  With that in mind, please leave the date of March 15th open in your calendar to join the UTA in Sacramento for its annual lobby day.  Your participation will be more important this year than ever. 

As you can see, there is a lot going on this year and its only March.  In anticipation of a busy legislative session, I want to give special thanks to each of our lobbyists, our long standing Legislative Committee head, Ron Roup, and everyone else on the Board and our members who donate their time to stem difficult and confusing new bills.  I want to thank everyone else for their ongoing contributions to the UTA and for making the UTA the leader in education among all the mortgage-related organization. 

Remember to participate in 2011.

Robert Finlay is a founding partner of the law firm Wright Finlay & Zak and serves as the President of UTA.  He can be reached at rfinlay@wrightlegal.net.