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32 basic understanding of loan servicers' roles and obligations is changing. Do they owe borrowers a duty of care when reviewing loan modification applications? Courts are dividing over that question, so the answer may depend on the jurisdiction in which you're litigating. Likewise, litigation involving the various state homeowner bills of rights that were enacted years ago are now reaching appellate courts. So, we're starting to receive guidance from those courts about what certain sections of those bills mean and require. In short, the challenge is keeping up with rapid changes in law, anticipating the direction the law is headed, and writing briefs that help shape the law's direction. What strategies can servicers employ to avoid costs and delays? It obviously depends on the case, but generally speaking, there are a few strategies that servicers can consider. e common theme running throughout them all, however, is to be proactive rather than reactive: foreclose, sell, and evict. Absent confirmed wrongdoing or a genuine threat of exposure to liability, foreclosing, selling properties out of REO, and evicting as quickly as possible tends to mitigate costs and reduce the probability of sequel lawsuits. In some cases, proceeding with a foreclosure, sale, or eviction can also prompt new settlement negotiations or voluntary dismissals. However, depending on your jurisdiction and the facts in your case, this strategy may be unavailable (for example, there's a stay forbidding a sale). In addition, servicers should stop successive modification reviews if possible. Anyone on the front lines of foreclosure- related litigation has no doubt encountered the homeowner who applies for a loan modification after filing a lawsuit, is denied, and then re- applies again a few days, weeks, or months later. is area is fertile ground for wasting both time and attorney fees. Successive reviews can also be dangerous. For example, when a borrower files a meritless lawsuit after repeatedly getting denied a loan modification, but the servicer thereafter commits an egregious mistake while re- reviewing him or her (such as inadvertently foreclosing during the review). Servicers need to be careful to avoid creating liability where Kerry Franich is a certified specialist in appellate law who works in Severson & Werson's Orange County office where he prosecutes and defends State and Federal Appeals covering subjects including financial services, real estate, arbitration, unfair competition, discrimination, judicial disqualification, and civil procedure. DS News spoke with Franich about the greatest challenges financial services' attorneys are facing today and how his years of experience help him navigate today's climate. What current challenges are appellate attorneys who work in default litigation facing? Procedurally, court congestion has worsened in many jurisdictions, which causes a lot of appeals to progress at a seemingly glacial pace. at's frustrating for both us and our clients, particularly when a sale is being delayed because of an appeal. Similarly, cases filed in trial courts these days often survive longer than cases filed several years ago because today's cases are usually less vulnerable to pleadings challenges. More frequently, eliminating them requires a motion for summary judgment or trial. So, one challenge is ensuring that our clients don't get trapped in a holding pattern just because of a pending appeal or lawsuit. We find that stagnant cases often lead to other problems: property preservation issues, needless escrow advances, and ballooning loan balances, all of which reduce the probability of the borrower curing the default or qualifying for a modification. ere are substantive challenges too. Regulatory compliance is rightly a top concern for most of our clients right now, but there are also basic macro-level changes occurring in the law right now that are equally important. For example, in some jurisdictions, our COUNSEL'S CORNER LEARNING LESSONS FROM DIVERSE COURT CASES "Anyone on the front lines of foreclosure-related litigation has no doubt encountered the homeowner who applies for a loan modification after filing a lawsuit, is denied, and then re-applies again a few days, weeks, or months later. This area is fertile ground for wasting both time and attorney fees." Kerry W. Franich, Attorney, Severson & Werson