Houston lawyer led investor charge in $8.5 billion Bank of America deal
A Houston lawyer with a small firm won an $8.5 billion settlement with Bank of America tied to the 2008 mortgage mess, a deal that could establish a road map for other banks in resolving the nation's stubborn housing crisis. "I think this is one of those rare opportunities for doing good for your client and doing good for the public," said Kathy Patrick, lead attorney for 22 big investors hit by losses from Bank of America and its Countrywide subsidiary. The settlement, announced Wednesday, not only would require Bank of America and/ or Countrywide to pay $8.5 billion to cover investor losses caused by problem mortgages, but it also would force a series of improvements in the way borrowers receive service when they need to reset terms or otherwise work out problems with individual loans â alleviating a source of friction and frustration.
Small firm, huge win in mortgage debacle
Houston lawyer led investor charge in $8.5 billion Bank of America deal
By Ronnie Crocker
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The Houston Chronicle
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A Houston lawyer with a small firm won an $8.5 billion settlement with Bank of America tied to the 2008 mortgage mess, a deal that could establish a road map for other banks in resolving the nation's stubborn housing crisis.
"I think this is one of those rare opportunities for doing good for your client and doing good for the public," said Kathy Patrick, lead attorney for 22 big investors hit by losses from Bank of America and its Countrywide subsidiary.
The settlement, announced Wednesday, not only would require Bank of America and/ or Countrywide to pay $8.5 billion to cover investor losses caused by problem mortgages, but it also would force a series of improvements in the way borrowers receive service when they need to reset terms or otherwise work out problems with individual loans â alleviating a source of friction and frustration.
The terms apply only to trusts covered by the settlement, but Patrick said they were designed as a model to help lenders resolve current complaints and avoid future meltdowns. Given the potential implications for the national economy, she said, the deal was "very gratifying" to work on. It was lucrative, too. If a court approves the deal, Bank of America would pay Patrick's firm, Gibbs & Bruns, $85 million in legal fees. |
(Patrick said she isn't sure how big her own cut might be, explaining, "We have an old-fashioned partnership where it's share and share alike.")
Gibbs & Bruns has a single office here with 29 attorneys, including Patrick and 12 other partners.
Patrick said the involvement of a boutique law firm from Texas might surprise some, even though clients Pacific Investment Management Co. and BlackRock Financial Management Inc. and its predecessor companies have been represented by the firm for more than 20 years.
But she said it highlights another facet of the financial crisis: the interconnections of big-money players in New York. An outside legal firm had to get involved because the major ones there already do business with the big banks enmeshed in the financial crisis.
Helping trust companies
Patrick said that web of connections "plays a real role" in some of the problems that linger today.
In addition to paying $8.5 billion to 530 mortgage trusts affected by problem mortgages, Bank of America would be required to transfer 300,000 loans to a small group of companies for improved servicing under the terms of the deal, she said.
For the remaining 400,000-plus loans in the myriad trusts covered by the deal, Bank of America would have to follow a set of industry benchmarks for ensuring borrowers have adequate collateral and that the loans are followed up with quality servicing. The banking giant would have to cover any losses caused by its failure to meet those standards, she said.
Although there is a vast difference in scale, this was not Patrick's first foray into matters of public interest.
Activist, churchgoer
The El Paso-area native moved to Houston after her graduation from Harvard Law School 26 years ago, and joined Gibbs & Bruns after spending a year clerking for a federal appellate judge based here. One of her first pro bono cases involved the death sentence of Calvin Burdine, whose defense attorney had slept through parts of his trial. Burdine eventually was released from death row.
In the early- to mid-1990s, Patrick represented doctors suing anti-abortion activists for allegedly violating court orders limiting how close they could stage their protests.
She also represented the city of Houston in defending challenges to its anti-smoking and air-pollution ordinances.
Last year, she testified on behalf of John O'Quinn's foundation in fending off an effort by the late attorney's longtime companion to secure five vintage cars she said he'd wanted her to have.
Patrick's sense of duty seems to extend to the personal realm as well. A devout Lutheran, she teaches Sunday school, sings in a "praise band" and is involved along with her two teenage sons in church-sponsored service projects. Her husband, a retired Vinson & Elkins lawyer, is a divinity student.
"We do all kinds of service," she said, "because that's what God calls us to do." Read more: http://www.chron.com/disp/story.mpl/business/7633332.html#ixzz1Qnx3focP |