Partner Fred Gallo Quoted in Law360 on NY Champerty Case

Fred Gallo, a partner in the firm’s Real Estate Practice, was quoted in an article in Law360 on a New York Court of Appeals case that could have a significant impact on the commercial mortgage-backed securities market. The state’s champerty statute allows parties to transfer litigation rights, but only in some circumstances. The Court’s decision is expected to clarify the application of this arcane law to recent cases involving fraudulent and defective mortgage loans. “When we think about how huge the secondary mortgage market has been, the application of the law of champerty to underlying loan purchasers would have a devastating effect on the secondary mortgage market,” Mr. Gallo says. “It could create a level of uncertainty that no prudent loan purchaser is going to want to take.” He adds, “Many people in the secondary debt market didn’t give a great deal of thought to the champerty law before. If this were a stronger economy, would this have been such an interesting issue? Probably not.” (“NY Champerty Case Puts Debt Investors On Alert,” October 2, 2009)