In an interview, Laurence E. Platt, co-practice area leader, Kirkpatrick & Lockhart Preston Gates Ellis LLP, shared his thoughts about the state of the current legal environment for the mortgage industry. Typically, lawyers in the industry like doing day-to-day compliance counseling, but now they are spending most of their time on government-enforcement actions, loan-repurchase demands and class-action litigation. So the legal work is really dealing with the downside of the business rather than the upside of the business. A single primary legal threat to the lending industry that trumps all others right now is loan repurchase demands -- commercial claims. Beyond that, Platt doesn't think it's a single law as it is that the industry is under attack and it makes people wonder whether the profits are worth it -- particularly on the Wall Street side. Next to the legal liability for loan repurchase demands, it's probably the fact that this legal uncertainty and the aggressiveness of plaintiffs is causing participants to say it's just not worth it.
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