The Great Recession confirmed an omen shared by many
conveyancers during the real estate bubble that preceded it. The
volume of work and income we were experiencing was too good to be
real. Our concern quickly proved to be well founded as the
recession devastated real estate values and precipitously reduced
the need for our services. As the recession dragged on, those of us
involved in providing legal services for home owners found
ourselves counseling clients less on the legal aspects of
purchasing, selling and financing home transactions and more about
how to weather the financial woes of high mortgage payments on
"underwater" homes. The situation intensified as clients and
potential clients suffered under-employment and unemployment. We
found ourselves struggling with the inability of secondary mortgage
market lenders and loan servicers to effectively process short
sales and loan modifications.
There appears to be slow improvement in the employment market,
decreased bankruptcy and foreclosure filings and an increase in
loan modification approvals. However, the financial media is
beginning to opine that the various loan modification programs will
fall short of their goals notwithstanding the increase in
approvals. Although unemployment is beginning to decrease, many
people returning to work are finding themselves under-employed and
income growth relative to inflation remains stagnant. Many loan
modifications now going into effect provide for graduated increases
in the initially lowered interest rates along with increased
monthly payments. As a result, it is very likely that the financial
crises of a substantial number of individuals will remain unabated
or recur.
These economic developments have coincided with the decisions in
Real Estate Bar Association for Massachusetts, Inc. v. National
Real Estate Information Services, et al, in 2011, U.S.
Bank National Association v. Ibanez in 2012, Eaton vs.
Federal National Mortgage Association in 2013, and the
implementation of the Consumer Financial Protection Bureau
regulations this year.
These changes in the economy, case law and consumer protection
regulations will undoubtedly result in major sea changes in both
conveyancing and consumer bankruptcy practices.
When I graduated from Suffolk University Law School 38 years
ago, a residential real estate practice consisted of representing
individual borrowers/buyers and sellers on a fee basis and
conveyancing for local banks. The change of mortgage lending being
provided primarily by large secondary mortgage market lenders with
national outreach has increasingly required Massachusetts
conveyancing practices to accommodate the national trends. The most
apparent result of this accommodation is the reduction and even
elimination of fees for traditionally fee based services (e.g.,
representation of buyers and sellers in connection with purchase
and sale agreements) and rely on title insurance premium
commissions for economic survival.
In the past, I focused my practice on the needs of individuals
in purchases and sales of what was usually their most significant
and important financial investment. As a result of the
aforementioned trends, I am seeking ways to modify the way I can
continue to focus on the legal services required by individuals
relative to ownership of their primary residences. My personal
preference is to continue devoting most of my practice to the
personal legal services required by these individuals in lieu of
developing a business model that would require changing my
philosophy. Admittedly, this preference could mean that I am just
an old dog unwilling to learn new tricks.
Although most of my career has been in the area of conveyancing,
I had some mentoring by experienced bankruptcy attorneys shortly
after my admission to the bar. This served me well when my practice
included foreclosures for local mortgage lenders in the late 1980s
and the recession of 1990-1991. Specifically, I found that I could
successfully prosecute motions for relief from automatic stays.
Although the need for conveyancing services rebounded in the 1990s
and well into the new millennium, I retained an interest in
bankruptcy and had begun to counsel clients who found themselves on
the other end of foreclosures. Eventually, I began to file some
consumer bankruptcy cases but it remained a very small part of my
practice. I became reluctant to take on any new bankruptcy cases
with the passage of the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (BAPCA). However, the improvement of
bankruptcy software that simplified the statistical requirements of
the BAPCA means testing coincided with the onset of the recession.
I found myself with clients needing these services along with an
improved capacity to process their cases. In doing so, I have not
promoted myself as a "bankruptcy expert." Instead, I have made it
clear that I am still a general practitioner with a lot of
experience in real estate law and capable of handling basic
consumer bankruptcy cases.
Consumer bankruptcies provide one important tool that home
owners should consider when their continued ownership of their
principal residence and/or investment becomes financially
challenged. Going forward, I am hoping that I can make this area of
the law a viable and compatible part of a practice focused on
individual needs. Bankruptcy is a complex area of the law. Shifting
toward an increase in handling these cases without past
specialization is somewhat daunting. Members of the local
bankruptcy bar, including the bankruptcy trustees and their staffs,
have been very forthcoming with advice, providing a valuable
supplement to traditional CLE. A national source of CLE and
networking is the National Association of Consumer Bankruptcy
Attorneys (NACBA). The fact that bankruptcy is exclusively federal,
a national organization like the NACBA provides an abundance of
helpful tools.
I truly appreciate the changes taking place in conveyancing. The
need for new business models to accommodate those changes provides
a great opportunity for new members of the bar to use their legal
training in an entrepreneurial manner necessitated by the shrinking
job market available to recent law school graduates. As I have
alluded to in this article, it is a personal choice to modify my
practice instead of completely changing its business model. In
doing so, I hope to continue using the valuable skills we all
acquire in this profession in the same manner and with the same
philosophy that initially incentivized me to be an attorney.
Michael Katin, a resident of West Newton, has been a
shareholder of Scheier Katin & Epstein PC since its founding in
1990. Katin is the chair of the Massachusetts Bar Association's
Real Estate Law Section.