By Sheila Pursglove
Legal News
When John Jacobs was asked a few years ago to represent and defend someone in several mortgage fraud cases, his response was: “I’m not going to represent you — I’m about to file suit against you.”
“This person was engaged in committing extensive fraud,” explains Jacobs, a shareholder in Maddin Hauser and a specialist in commercial transactions, real estate, residential mortgage banking, and lending and finance.
“Part of the problem came up due to the lax underwriting standards imposed by the industry — they would make loans to people under certain circumstances in which the lender had no obligation to verify income or assets.”
Prior to the real estate meltdown and recession, there was, in relative terms, a substantial amount of mortgage fraud by people who came into the industry knowing nothing about it, Jacobs says.
“They were just seeking to make money and doing whatever they thought it took to make money. Some of them may have clearly known they were engaging in illegal activities. Others may have just followed this path and thought, ‘OK, this is the way to make money.’”
Happily, mortgage fraud has been substantially reduced — if not virtually eliminated. The industry fiasco brought the problem to everyone’s attention, and as a result, underwriting standards have increased significantly, Jacobs says.
“Companies are now doing a better job at hiring people and getting them licensed and trained,” Jacobs says. “Any company that’s still in the business does not want to see this happen again. While there are still many companies in the industry, quite a few have been forced out.”
Jacobs was drawn to real estate from the get-go, working for a commercial law firm that represented the third largest mortgage company in the country at that time, as well as a smaller, more localized firm and several real estate developers.
“What I like most is solving problems and working with entrepreneurs,” he says. “Whether that person owns a mortgage company or is a real estate developer, I like the working relationship and the challenge of making the deal or solving the problem.”
Structuring a transaction to achieve a client’s desired result can be a challenge.
“They want to buy a company, but they want to buy it only under certain circumstances — so I need to structure that transaction to meet their requirements.”
Jacobs has worked with the Michigan Mortgage Lenders Association since 1977 when the president of a company he represented became MMLA chairman and asked Jacobs to do legal work for it.
He started with the national Mortgage Bankers Association in 2008, when there was a proposal in the legislature to adopt anti-predatory lending legislation.
“While we supported the concept, we opposed the method of accomplishing this result,” he says. “The Mortgage Bankers Association contacted me and asked me to represent them in this effort, which went on for several months.”
Amongst his MMLA work was 18 months of negotiating and drafting legislation that licenses and regulates mortgage companies in Michigan.
“What was challenging was that there were always approximately 20 people at the table — it included all of the various trade associations that could have involvement, such as the real estate brokers association, mortgage brokers association, credit unions and banks. So we needed to negotiate and work our way through this.”
Jacobs has always been good with numbers. But after earning his undergrad degree in accounting from Michigan State University, he decided a career in crunching numbers was not a good fit, and decided to follow the trail his father once travelled into law.
“I find law to be both intellectually challenging and stimulating — it always allows me to do something different, and each problem presents a new challenge,” he says.
He earned his J.D. from the University of Michigan Law School.
“I really enjoyed the opportunity to work with some terrific students and professors - they were very smart and challenging people and there was always terrific competition among the students,” he says. “You had to learn how to work with the professors. And it was always important that I was attending one of the best law schools in the country.”
Jacobs joined Maddin Hauser in 2000, after 19 years as a managing shareholder at Mason, Steinhardt, Jacobs and Perlman. Maddin Hauser works hard to create a good, sound working atmosphere and is an enjoyable place to work, he says. Get-togethers include a company picnic and couple of ice cream socials each year.
“There’s a great effort to put everyone on the same level and make sure everyone has an opportunity to get to know one another,” he says. “Although we’re a good size firm, we’re still small enough to be somewhat like a family. We work together as a team and are always available to assist one another in solving problems for our clients, and I enjoy the quality of the lawyers that work for the firm.”
For three years, Jacobs taught a night school class in “Consumer Credit Regulation” at Wayne State University Law School, until the demands of his law practice made it impossible to continue.
“I enjoyed teaching — I liked the challenge it presented in terms of being prepared, being able to answer students’ questions and working with the students,” he says. “I gained tremendous respect for those students working full time and then going to law school at night, and thank my lucky stars I wasn’t in that situation as a student.”
As a teacher, he added practical approaches, such as how to write an opinion letter — “Teaching students what do you say, how do you put it together and what to be careful about. I also talked to them about solving problems and looking at the practical approach to the solution: For example, what is this going to cost the client versus what is the value of the solution?”
A Detroit native who has lived in Huntington Woods since the ‘70s, Jacobs sees hope for the future of the city and the state.
“There are a lot of people working hard to solve our problems like Mayor Bing and the state representatives and state senators who are in metro Detroit,” he says. “One person doing a tremendous job is Dan Gilbert, who happens to own a ‘little’ mortgage company on the side.”
Jacobs’ wife Gilda, a former state representative and senator, is CEO for the Michigan League for Human Services, an organization advocating on behalf of disadvantaged people. Their daughter, Rachel, a business consultant in New York, organized the nonprofit Detroit Nation, attracting Motor City ex-pats who want to give back to the city.
“Rachel has a few hundred people involved, raising money or looking for projects in the Detroit area — an example of people working together to help Detroit solve its problems,” Jacobs says.
“We have several nonprofits working to improve the circumstances in Michigan and we’re seeing other changes that give me optimism for our future. All of the lofts in the midtown and downtown area are leased and there are a lot of young people electing to live in these areas - that alone gives me hope. There are still some huge challenges, but at least there are indications that people have not given up.”
The couple’s other daughter, Jessica, works in public health in New York.
“By deciding to pursue a career in public health Jessica made a decision to accept a salary below the salary she could earn in other vocations,” Jacobs says. “I’m proud of both of my daughters — they both take after their parents in terms of giving back to the community.”
Jacobs served as president of the Michigan Advisory Board of the Anti-Defamation League (ADL), where he was honored with the Torch of Liberty Award. He also served as president of Temple Emanu-El and president of Jewish Family Services, providing counseling services and financial assistance. Currently, he is a member of the board of Jewish Vocational Services (JVS).
“I became affiliated with these organizations because they help individuals,” he says. “My effort is to help people who can’t help themselves. I’ve been actively involved in charitable efforts my entire career because I’ve always believed I’ve been very lucky — I have a good job and make a good living. I have an obligation to give back. Anyone who is successful should give back to those who have not been as lucky.”
Jacobs unwinds with long distance bicycle riding, and rides in charitable events such as the Tour de Cure fund-raiser for the American Diabetes Association, a ride of about 75 miles.
“And I’m an avid, lousy golfer, and have been for years,” he says with a smile.
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