Washington and Lee law alumnus Talcott Franklin, of the Class of 1995, was the subject of a couple of articles in the financial press last week. The focus was on the clearinghouse that he created to allow investors in residential mortgage-backed securities that went bad to pool their claims and, as Bloomberg BusinessWeek reported, “potentially create the necessary legal clout to force mortgage lenders to buy back improperly made loans at the heart of the securities.”
Before Talcott established RMBS (“residential mortgage-backed”) Investor Clearing House, individual investors in such securities had no way of knowing who other investors were.
In addition to the story on Bloomberg, Talcott’s new venture was spotlighted in the Wall Street Journal, which said he now represents investors holding 2,300 mortgage bonds. As Franklin, a Dallas-based attorney, told the Journal, when he started, he expected to get about 25 percent of investors in 200 deals. He never imagined he would wind up with a third of the market.
Talcott is co-author of the “Mortgage and Asset-Backed Securities Litigation Handbook.” He had been a partner with Patton Boggs, Washington’s biggest lobbying firm, but resigned to begin this new effort. In explaining the clearinghouse, which uses a software system created specifically to match investors, Talcott told the Journal that some investors “had no idea that their money was being invested in mortgage-backed securities. And yet somehow these people are now the ones being punished, and that’s just not right.”