MORTGAGE SERVICERS FACE MORE HEAT UNDER SETTLEMENT
So far, the big mortgage servicers have received good report cards for their compliance with the $25 billion national settlement, but that could change this year as testing gets tougher, National Mortgage News reported on Friday. There is a big discrepancy between the strong test results to date and the massive number of consumer complaints, says settlement monitor Joseph A. Smith Jr. Consumers have filed more than 112,000 complaints with regulators, servicers and housing counselors since October 2012, mainly claiming that servicers are still too slow to determine whether borrowers are eligible for loan modifications. "Borrowers still don't know what the rules of the road are and how long it will take for a servicer to look at a loan mod application and decide whether they get relief or not," says Smith. The biggest potential challenge for servicers could come in April when four new tests go into effect that specifically address consumer complaints about shoddy billing practices, lax communications and widespread denials of loan mods. The results of those tests won't be available until the end of 2014, so it may be some time before it becomes clear how well servicers are complying with the servicing requirements in the settlement. Read more.
Note that the new Consumer Financial Protection Bureau rules for mortgage servicers are effective on Friday, Jan. 10. If you need to brush up on those rules and to hear a discussion by experts on their impact, be sure to take advantage of ABI's online CLE programming, which features a webinar on the new servicing rules. Click here for more information.
STUDY: LAW FIRMS SHOULDN'T CHASE GROWTH JUST TO GROW
The economic dissonance between the legal sector and other industries when it comes to growth is at the heart of a new report from Georgetown Law's Center for the Study of the Legal Profession, which argues that firms are bulking up for all the wrong reasons -- and doing so at their peril, the Am Law Daily reported today. "[G]rowth for growth's sake is not a viable strategy in today's legal market," the report said. Instead, its authors insist, law firms should focus their efforts on "issues that clients care about," such as being more responsive, efficient and cost-effective. The report comes on the heels of what was a record-setting year for law firm mergers in the U.S., according to data compiled by legal consultancy Altman Weil. The firm tallied 83 announced mergers in 2013, with all but a handful involving larger firms acquiring smaller shops with less than 50 lawyers. Three proposed mergers between pairs of Am Law 200 firms that would have been among the larger deals of the year also sputtered in rapid succession in recent weeks: Orrick, Herrington & Sutcliffe's talks with Pillsbury Winthrop Shaw Pittman; McKenna Long & Aldridge's proposed tie-up with Dentons; and Locke Lord's negotiations with Patton Boggs. To support its thesis, the Georgetown report cites research showing a low correlation between profits per partner and size within The Am Law 200, a negative relationship between a firm's size and its profits as a percentage of revenue, and the diminishing benefits of scale that accrue once a firm has more than 100 lawyers. Read more. (Subscription required.)
CORPORATE PENSION PLANS AT STRONGEST FUNDING LEVEL IN YEARS
Strong stock market gains and slowly rising interest rates have left corporate pension plans in their healthiest state since the recession hit, a development that analysts say creates an opportunity for many firms to off-load them, the Washington Post reported on Friday. The funding level for the nation's largest corporate pension plans increased sharply in 2013, with the ratio of assets to liabilities rising from 77 percent at the end of 2012 to 93 percent at the end of 2013, according to Towers Watson, a benefits consultancy. That has left corporate pensions in their best shape since 2007, when the average funding level for Fortune 1000 firms offering traditional pensions stood at 106 percent. The improved finances offer relief to corporations that have been spending tens of billions of dollars in recent years to keep their pension funding levels in compliance with federal regulations. But rather than just assuring the future of the shrunken number of traditional pension plans that make guaranteed payments to retirees for life, the improved funding levels also make it more feasible for more firms to shed pension obligations altogether. Firms can do that either by offering lump sums to workers or by transfering the future liabilities -- and the money set aside to meet them -- to insurance companies that convert them into annuities. The percentage of private-sector employees who are covered by traditional pensions has decreased by about half since the early 1990s, to just 18 percent last year, according to the Labor Department. Read more.
NEXT WEEK! NEW ABILIVE "BACK TO BASICS" WEBINAR SERIES KICKS OFF WITH A LOOK FINANCIAL STATEMENTS AND OPERATING REPORTS
Send your associates to ABI's "Back To Basics" webinar series, hosted by the Young and New Members Committee, this month. The series will cover the fundamentals of financial statements and operating reports (Jan. 14), using financial documents as evidence (Jan. 21), and hedge funds (Jan. 28). Let a trusted CLE provider help get your associates up to speed. Register for the complete series and get the third webinar free!
ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS
Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings. The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.
DETROIT EMERGENCY MANAGER KEVYN ORR TO KEYNOTE ABI'S 32ND ANNUAL SPRING MEETING ON APRIL 25
Kevyn Orr, emergency manager to the city of Detroit, will provide the keynote at the Friday Luncheon at ABI's 32nd Annual Spring Meeting at the JW Marriott in downtown Washington, D.C. The conference, taking place April 24-27, 2014, features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various "tracks," including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. The Annual Spring Meeting offers 18.25/22 hours of CLE/CPE credit, along with ethics credit totaling 3.25/4 hours. In addition, committee sessions will drill down on topics covered in the larger sessions to provide you with the most practical and varied CLE/CPE experience ever. Also featured will be a special half-day optional event sponsored by ABI and the FCBA titled "The Intersection of the FCC and Bankruptcy Law."
Sessions at the 2014 Annual Spring Meeting include:
- 18th Annual Great Debates
- Where the Work Is (and Isn't)
- The Ever-Changing Role of Committees
- Large Complex Trusts: A General Motors Case Study
- Municipal Bankruptcies
- Use of Governmental Assistance Programs in Chapter 13
- The Financial Professional’s Role in Out-of-Court Restructurings and Dissolutions
- Civility in the Restructuring Profession
- Union Contracts
- Student Loan Update
- Social Media: What You Don't Know Can Hurt You
- The § 363 Sale Process from a Transactional Perspective
The conference kicks off with an Opening Reception at the Smithsonian's National Museum of the American Indian, offering a truly D.C. experience. Optional events include a golf tournament at Westfields Golf Club, a Washington Nationals vs. San Diego Padres baseball game and an evening at the Kennedy Center with the National Symphony Orchestra.
NEW CASE SUMMARY ON VOLO: CHIONIS V. STARKUS (IN RE CHIONIS; 9TH CIR.)
Summarized by Bryan Robinson of the Law Offices of Bryan Robinson
In an unpublished opinion, the Ninth Circuit Bankruptcy Appellate Panel (BAP) upheld part of the bankruptcy court finding that the creditor (Starkus) violated the bankruptcy discharge and the discharge injunction by bringing a suit in small claims court to recover a debt discharged by debtor Chionis' chapter 7 bankruptcy. The BAP reversed the finding by the bankruptcy court, that the creditor did not subjectively know the injunction applied to him, as clearly erroneous. Accordingly, the BAP vacated the judgment in favor of the creditor and remanded the proceeding back to the bankruptcy court.
There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.
NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FIVE THINGS STUDENT LOAN LAWYERS COULD ASK BORROWERS WHO FILE FOR BANKRUPTCY
The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post poses five questions that may be raised when consumer debtors look to cancel their student loan debt in bankruptcy via the "undue hardship" clause of the Code.
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
ABI Quick Poll
A debtor may strip liens in a "chapter 20" case.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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