I had lunch with a friend yesterday who is a regular reader of my blog. He wanted me to write something about my legal career – what did I do? How did I do it? I told him I had hesitated only because I didn’t think it was interesting, but he tried to convince me I was wrong, so here I go.

And, dear reader, promise me something. Please read this post to the end. I know that some of it may seem uninteresting, but reading it to the end will be worth it.

I first started the private practice of law in 1972. I had previously done several years of government work, first in St. Louis and then with the Department of Housing and Urban Development in Washington. I went to the office for my last day of law practice on December 31, 2011. During that time, I practiced with three different firms, and the majority of my practice involved representing clients who developed, managed or financed affordable housing. And most of the housing I worked with were multifamily housing developments which received either FHA mortgage insurance, federal subsidies, direct government loans, low income housing tax credits, or a mixture of two or more of these.

The work was interesting, had a public benefit aspect to it, and was often frustrating, of course. Dealing with the government is never easy. Because I had worked at HUD for a few years before entering private practice, I had the advantage of knowing how the government worked, how government employees thought, and I knew many of the officials with whom I interacted personally.

What should I tell you? Maybe I will start with one of my most embarrassing moments. Then, if I sense any interest in this, I can later talk about my successes.

Probably my most embarrassing moment involved the first real estate construction closing I was ever involved with, only a few months after I left HUD. I had just started with a small 7 man firm that was only two years old and was created to do this type of work. One of the partners assigned me to represent a developer from New Jersey. I don’t remember my client’s names or anything about them, except that the FHA world was new to them as well. This would be their first FHA project, and I sensed they didn’t know very much. The firm had never represented them before.

The project was a federally subsidized property with, as I recall, maybe 20 townhouse units, to be built with an FHA insured loan that came from Wachovia Bank in North Carolina. It was being built in a small town in southwest Virginia, Chatham VA. And yes, I did have a local lawyer to work on all of the zoning and other local law aspects of the transaction.

The closing was held in Richmond, at the HUD office there. Oh, you may not know what a closing is. Basically, it is when the financing is put in place, the construction contract signed, and the first funds released by the lender, so that construction can start. I wasn’t too nervous, because I was going to the closing with a partner in the firm, and I assumed I would just listen to what he said and see how he handled the closing. I figured that after doing this a couple of times, I’d be ready to do it on my own.

At least this is what I thought until the night before the closing when the partner told me that he decided he wasn’t going to go (or maybe something had come up and he couldn’t go), and I would be the only one there from the firm. What???

I drove to Richmond and met with the client and then with everyone else, including a lawyer representing the lender, an employee of the lender, the architect, the contractor, people representing the title company, and a slew of people from HUD. I soon realized that I was in charge of the closing, but really didn’t know what to do. There was a pile of documents that had to be reviewed and signed, and I just guessed that I should identify each and pass them around. That seemed to be the right thing to do.

The group was friendly enough and I was stumbling through the closing, looking more confident than I was in fact (obviously), and I began to relax a bit. And then a question came up. It had something to do with the title insurance, and the question seemed like something you would learn in Title Insurance 101. I thought I knew what the answer must be, but I had not thought about it before, and I didn’t want to blow it. Although I don’t remember the question, and although I thought it basic, I also remember that a wrong answer could raise all sorts of future problems. So I punted, and said that although I knew the answer, that there was something that I wanted to check, if they would give me a couple of minutes to call my office.

I called the partner to confirm my thoughts on this clearly very basic question. I asked him, and his answer was: “I have no idea. I have never done an FHA closing.” “What?”, I responded, “Can you switch me to someone who has?” And he said, “No one here has. This is the first one the firm has ever done.” I didn’t faint, but I did feel all of the blood drain out of my head down into my feet. I took a deep breath and went back to the closing room.

“It’s as I thought”, I said, “there’s no complication here. The answer is _________.” Everyone shook their head up and down.

The closing was completed. I drove back to DC. I felt relieved. I had completed the closing. On to other things.

One day, about nine months later, the phone in my office rang. It was the lawyer who represented the lender, the bank, at the closing. He told me that my clients had defaulted on the loan, and abandoned the project mid-construction. I hadn’t known that, but it didn’t surprise me – I hadn’t any confidence in them.

When this type of default occurred, a lender would “assign the loan” back to the FHA. The FHA (a division of HUD) would then become the lender, and HUD would pay the lender the amount it had already loaned out under the FHA insurance contract. Assigning a loan is not difficult. The most important thing is for the lender to take the mortgage note, and to endorse it on the back over to the FHA commissioner. Not difficult at all.

But one thing. In order to do this, the lender must have the original mortgage note. And the lawyer representing Wachovia didn’t have it. He asked me if, perchance, I had taken the original note by mistake at the closing. I told him that was impossible (and I thought “Jeez. He lost the mortgage note?”), but I would check my file.

I hadn’t looked at the file since the day of the closing and within its several inches of documents, there it was. The original mortgage note – the most important document for the lender to have in his possession as he left an FHA closing.

I called the lawyer back and told him that, in fact, I had it (I was a bit embarrassed). I told him I had swept up all the papers left on the table after the closing and put them in my file, without looking at them. But I asked him how it was possible that he (or his client) hadn’t made sure to take the mortgage note. “Well”, he said, “you didn’t know this, but it was my first FHA closing”.