Sponsor Highlight + Know Your Speaker Series: Default Attorney Group
In this episode, we sit down with Jane and Josh from the Default Attorney Group (DAG) — a coalition of seasoned creditor rights law firms spanning 20+ states — to unpack what really goes on behind the scenes of a foreclosure, bankruptcy, or title claim.
Whether you’re a seasoned investor or new to distressed notes, this conversation offers a masterclass in legal landmines — and how to avoid them. Josh, who will also be speaking on-stage at The Paper Trail Note Conference, walks us through critical differences between judicial and non-judicial states, how title defects can sideline a deal for years, and why fast communication with your legal team can be your most valuable asset.
Plus, you’ll learn how DAG can serve as your one-stop shop for legal help across the note lifecycle — and why we’re proud to have them as sponsors of the Paper Trail Note Conference.
🎧 Tune in to hear:
- What makes a default attorney indispensable
- How to avoid costly mistakes with HELOCs, affidavits, and foreclosure timelines
- The #1 mistake lenders make when trying to save money on legal
📍Catch Josh and the DAG team live at Paper Trail, Sept 18–20 in Chandler, AZ.
Register here: papertrailconference.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:43):
Jane and Josh, how are youdoing today?
Wonderful.
How are you, Chris?
Great, Chris.
Good.
We were just talking beforerecording some of the crazy nightmare
stories we have in the lending space.
And that's part of why, youknow, we have Jane and Josh on today
is they can be the servicesthey provide, the little angel on
(01:05):
your shoulder of getting youout of trouble or having you deal
with some challenging borrowers.
So, you know, Jane, if youwant to start and tell us a little,
a little bit more aboutyourself and your services.
Yeah, sure.
So Josh and I are both withthe law firm of Reuben Lublin.
We are in Georgia, Alabama,Mississippi, Tennessee, Florida and
(01:27):
Arkansas.
We handle all forms of defaultservices and have been around for
a very long time.
But the group that we belongto that will be at your conference
is called Default AttorneyGroup dag.
And it's a group of sevencreditor rights firms that got together
(01:49):
to do educational events forservicers, lenders, note buyers,
the whole gamut.
And you know, we're, we'rehere, we're 20 plus states, I believe,
with DAG now.
So, yeah, we just try to helpyou guys out when you have legal
issues or foreclosures,bankruptcies, evictions, whatever.
That's what we do.
(02:11):
One of the things that I findextremely important is communication
and just knowing where files stand.
And that's something thatthroughout the course of working
with the firms affiliated hasbeen just that communication piece
and understanding what isgoing on or the assistance that needed
(02:32):
at any point in time or the documents.
That communication piece to meand for people listening, you know,
when you're evaluatingservices is a critical component.
And when you aren't gettingresponses, it can get extremely frustrating
because we know time is moneyin our business.
So that's something that Iappreciate and just want to say thank
(02:53):
you to both of you becausethat's something that we add tremendous
value to our team.
And I know Larisa is excitedwhen she works with you guys.
Well, thank you for that.
So those are great words.
So I kind of dive a little bitinto, you know, you mentioned, you
know, 20 plus states and so forth.
So now you can handle then,you know, both judicial, you're in
(03:16):
both judicial and non judicialbecause you mentioned, you know,
Florida and some of the other states.
And for people listening,again, some people know the differences.
But can you provide a littlebit background just on some of the
main differences between ajudicial and non judicial state?
Yeah, go ahead, Josh.
Sure.
Yeah, sure.
I'd be happy to take that one.
(03:36):
So the state obviously is setout is set out that way.
And the security instruments,Chris, are tailored to that state.
For example, Tennessee is anon judicial state.
So we have what's called adeed of trust as a security instrument.
The deed of trust is a threeparty instrument.
We've got the borrower, thelender and a trustee.
And that's really the rolethat Reuben Loveland serves.
We end up being the substitute trustee.
(03:56):
Usually there's just aplaceholder trustee in the security
instrument and then will besubstituted in later.
That deed of trust gives thepower, the non judicial power of
sale to the trustee to stayoutside the court system and be able
to hold a foreclosure salebasically on the courthouse step.
So obviously there are noticeprotocols in that security instrument
that must be followed.
(04:17):
Our non judicial footprintstates, Tennessee, Georgia, Mississippi,
Alabama, Arkansas, these areswift foreclosure states.
And the power of sale existsthere in those states versus the
judicial system which is justa completely different animal.
It's just, we're just talkingabout a completely different world.
That is literally as it sounds.
It is a true judicial processin every sense of the word.
There is a complaint that isfiled, service has to be served on
(04:40):
all of the parties.
So not just the borrower.
But if there's been a newowner that's been deeded to the property,
they have to be providednotice and then any subordinate lien
holders and then of course atime period in which these folks
have to respond to the lawsuitand then some will respond, some
won't.
So you're getting you know,orders with some defendants.
And anyway so it is, it istruly a, the judicial side is, is,
(05:00):
is, is every sense of thatword is a judicial process.
Whereas again the totalopposite spectrum and that's, that's
really been, we recently movedinto Florida before.
We've just been primarily anon judicial focus practice.
And it is really quite a,quite a difference between those,
those, those two, those two processes.
But.
Right.
Cause like the timeline isaverage for the Non Judicial is 69
(05:22):
days, you know, and thenyou've got the judicial which could
take year more longerdepending on all the issues.
So I found that if youmentioned the non judicial, you know,
typically you know, two orthree months and so forth on the
judicial side if you're luckyto get the borrower served within
(05:43):
that period of time, you are lucky.
And we found in states likeFlorida, borrowers can get creative
and they can dodge service andyou know, there's just, you know,
then you have to you know,provide certain notices.
We've got a loan in WashingtonD.C. that the borrowers dodge dodge
services.
Is my New England accentcoming out.
And the court would not deema, I forget like supplemental service
(06:08):
until we've attempted 12different times to reach the borrower
and should prove that we'vetried like 12 times and some of that
stuff, you know, let's behonest, it's ludicrous.
So as an investor the nonjudicial side is much more streamlined
because you can control it.
Correct, John Josh versus thatjudicial state.
(06:29):
Yeah, it's statutory but youknow the statutes will often defer
back to the security instrument.
So you're literally justfollowing the terms of security instrument
which basically say run adsfor X amount of days, provide notice
in X way and once that is doneyou're ready to hold your sale at
the Cordell steps.
So it is, it is, it is verystreamlined, is very, you know, by
(06:51):
the book.
But it also is very swiftuntil we run into a myriad of title
type stuff that we could talkabout if you want to talk about that.
But certainly if title comesback clean and we get the documents
back from the investors thatwe need to file, we have to record
an appointment appointing usas that trustee.
And in some states by law andso sometimes we can't even run ads
until we're appointed subsidiary.
(07:11):
So follow these guidelines butwe work through them, we've got systems
in place for that and we canget you to the courtile steps in
a timely fashion in those nonjudicial time states.
Yep.
And you mentioned also, whichis actually where I was going to
spin into is the three thingswe typically try and partner with
(07:32):
our council on is first ofcourse the default slash, foreclosure
side of things.
Second is title, title reviewand that component.
And third of course is bankruptcy.
And that's I think anotherkey, key factor where you know yourselves
and the group have tons ofexperience where if something comes
(07:53):
back and whether it's a lostnote affidavit in a state or the
title might have, the legaldescription might have to be corrected
out of order assignment orsomething needs to be done.
You know, that's havingsomebody like yourselves who can
deal with those issues alsoand assist.
And again certain documentsyou have to chase down but at least
(08:13):
providing us, hey, this iswhat you're going to need up front
or early on so it's not last second.
And that's something againJoshua talk and Jane a little more
about that too.
Yeah, absolutely, Chris.
I mean that's really what'swhat we do.
You know, we're a default firmbut you could almost say we're a
title firm and that as much aswe are a default firm, we have a
group that that's what thegroup does.
(08:34):
That's kind of where I falland lean is on the title side.
I used to be a closingattorney for years, so I see a lot
of stuff on the backside whenwe're reviewing title for foreclosure.
Where sometimes I can say Iprobably know what happened because
from that closing side experience.
But we have a dedicated groupthat really all it does is file title
claims and do manual curative.
(08:55):
And that, that really is the question.
You know, some loans, youknow, there should be title insurance
in place most of the time.
Obviously, you know, a lendershould be getting lenders title insurance.
It is a significant tool onthe default side in terms of filing
claims and, and gettingletters of indemnity to allow us
to get to the courthouse steps.
Sometimes with GSE loansthat's not really an option.
There's GSEs out therebasically that you cannot use letters
(09:17):
of indemnity, these, thesetitle tools that we use.
But you know, on conventionalproducts and that kind of thing,
we can get letters of indemnity.
Basically we put the titleinsurance company on notice of the
title issue.
They evaluate it.
If it's something they thinkis a ripe, significant, serious,
almost fatal defect, they canchoose to retain counsel and cure
that.
And you know, that's of notebecause more and more we have files
(09:38):
where when that happens, a lotof times these tit claims can drag
on for a year.
It almost turned into ajudicial foreclosure because of this
title claim floating out there.
And basically the titleinsurance company is saying, yeah,
you really can't go to saleuntil this matter is cured.
Once it's been cured.
And a lot of times what theyhave to do in that claim is retain
counsel and file a titlecurative lawsuit.
So it's not a judicialforeclosure, it's a title cured of
(09:59):
lawsuit.
We will have a file, sometimesgo on six months, a year.
Eventually we get this courtorder that says the security instrument's
been reformed to correct thelegal description, for example, and
then we can go to do our nonjudicial sale.
And so there's a myriad oftitle issues, Chris, that we see
and deal with.
Senior unreleased liens is areal, you know, popular one if you
will.
A lot of times, you know,there's proof that those were satisfied
(10:20):
at closing.
And so we can band aid thatwith a letter of indemnity, but we'll
have some pretty Significantfatal defects.
We literally have two peopleon title and only one of them signed
our security instrument.
We'll have a complete missinghalf interest.
And so that, that's somethingthat if they can't go get a deed
from that person that it willprobably be litigated.
And so, you know, in a perfectworld, title will be clean and we'll
get you to sell quick.
But if it's not, you know,we've got the expertise to steer
(10:43):
you in the right direction onhow to get this stuff resolved.
Sometimes we'll just do thequick manual curative ourself.
You mentioned, you know, affidavits.
We'll use affidavits both inthe assignment arena like you mentioned,
with out of order type stuff.
And we'll also use affidavitsto cure title.
In some states we can do likeGeorgia, we can do a title affidavit
where a license attorney cansay, yeah, this is kind of what happens,
this is what's correct and wecan put that down on our chain and
(11:04):
proceed.
So we've got the expertise andthe tools to navigate through this
sea of title issues, if you will.
Yeah, I have one right nowthat's been going on for three plus
years.
Title claim.
What happened was there was afirst and then a second mortgage
on the property and theborrower refinanced the first and
(11:24):
you know, so they refinancedthe first.
That new lender stepped in to,you know, usurp or replace that first
position.
They also did get asubordination agreement from the
second, but the second wassigned by like a power of attorney
that the property ended upgetting sold for a lot less.
The second got wiped out atthe sale because the borrower filed
(11:46):
bankruptcy and they filed aclaim saying they never authorized
the subordination.
And they're also trying toclaim that because they were recorded
before the refinance thatit's, they should be in first position.
But which every law in theland says if on a refinance, you
know, you step into thatposition as long as, you know, they
(12:07):
increase and all that stuff.
So that one's been going onthree plus years.
We actually got a, we quoteunquote one two weeks ago, a month
ago, but then the borrowerfiled an appeal.
Then of course they filedappeal after the deadline, but now
we're waiting on the court tohear if they're going to hear the
appeal.
So now we're just waitingagain and it goes back to any time
(12:28):
you get deal with the courts.
Yeah, without question.
Those are, we, we've seenstuff drag on that long for sure.
It's what you think is goingto be, you review the title and think,
okay, we're going to reviewthis title.
Do we need to do and go to sale?
And the next, you know, inyour case, three years later, we're
still sitting here.
So, and I know there's,there's a lot of, you know, investors
that get upset and want toknow like if there's any, you know,
(12:50):
the holding cost, if you will,in terms of this, while this title
litigation is going on, like,is the title insurance company obligated
to, you know, reimburse forthese holding costs?
And you know, we'll, we'lldefer to the terms of the title policies.
But I think as a whole, Ithink generally no, there's probably
not, you know, it's just kindof unfortunately the, the cost of
business.
So the one we had the propertyactually sold and There was like
(13:11):
$600,000 in the last threeyears sitting in an account.
And I asked my attorney, I'mlike, well, we at least get interest
on that.
He's like, no.
And I'm like, you know, evenat today's interest rates, you know,
it's 3%.
That would have been 18 granda year.
That would have been nice.
Out of curiosity, like, youknow, if one comes to mind, do you
have a crazy case or a crazystory that just pops in your head
(13:33):
like a doozy or just out of curiosity.
When you were mentioned lean,you know, lean priority, the ones
that just always are reallyinteresting are the HELOCs.
Have you heard the termexpression kill letter?
Basically what happens is thestandard fact pattern is a person's
got a first mortgage on theirproperty and then they got a second
HELOC.
Just say the first is $100,000mortgage and the second is a $50,000
(13:54):
HELOC.
As somebody that used to doclosings, I mentioned earlier, it
is vital that the closingattorneys and closing agents really
pay close attention if thereis really an open ended second mortgage.
If it's a closed end mortgage,just a true second mortgage closed
in, then you just pay off thefirst, pay off the second on your
refinance.
And as you mentioned earlier,the new loan jumps in first position
(14:15):
and the other two areextinguished when that second to
heloc.
You've got to take somespecific measures as the closing
attorney to make sure that itis not just paid off, but also closed
down and released.
We had one time where theclosing attorney got a payoff and
may or may not have made aneffort to close out the second.
(14:35):
But basically the person soldhis property and purchased another
property, and he thought thatthe HELOC would just automatically
transfer over to his new property.
We had to go chase this guydown later.
That's why we know he said it.
But basically he thought theHELOC would transfer where literally
before they could even doanything, he had already gone out
and run up.
And I think it was more than50,000 in my example.
(14:55):
I think it was about 100,000.
He had already run that up inthe gap, period there.
So those HELOC stories and notgetting closeout letters, those are
the difficult ones for thetitle insurance companies.
Those are ones usually wherethere could potentially be a fatal
defect that ends up being a payout.
The myth about title insuranceis, you know, title insurance is
a contract of indemnity.
And so it is.
There's this kind of misnomerout there that there's a title issue.
(15:16):
The title insurance companiesjust stroke a check, basically, and
that's not the way it works.
It's literally a contract indemnity.
So if there has not been aloss suffered, the title insurance
company is not obligated toactually pay money.
They're obligated to step inand make the title good or retain
counsel to litigate and clearthese titles.
But a lot of times there'sreally no money going out for the
title insurance.
(15:37):
I think that's a misnomer out there.
That's important peopleunderstand it's a contract of indemnity
title insurance.
We have one situation wherethe notary stamp is incorrect on
a security instrument.
And we let the title companyknow because our attorney picked
that up and said, hey, thisisn't correct.
But because there's no damage,they will might acknowledge it and
(15:59):
may, if there's a loss, defend it.
But until that point in time,we're just like, okay, we're on notice.
Exactly.
And I'm actually glad youbrought up the defective notary acknowledgement.
That's really been a realinteresting development across our
footprint State, there hasbeen legislation and laws enacted
in the last five to seven,eight years to deal with that particular
(16:19):
issue.
What was happening wasbankruptcy trustees were having a
field day.
The first thing thesebankruptcy trustees were doing were
looking at the security instrument.
And if there was a defectivenotary, they were basically saying,
you do not have a validsecurity instrument.
You are unsecured in bankruptcy.
And it was obviously a hugeproblem and a huge issue for lenders.
And so I wish I knew what thefirst state was that accomplished
(16:42):
this, but somebody got it andthen all the other states started
following their lead.
Basically, we refer to it asthe savings statute.
I know Tennessee, Mississippi,maybe Alabama.
I've checked my notes, but Ican tell you definitively Tennessee
has a saving statute thatbasically says that regardless of
the fact that the notary mightbe defective, if the document gets
recorded, it is valid.
(17:02):
And so, interesting enough, assoon as that law passed all these
claims and bankruptcy justdisappeared into thin air.
These bankruptcy trustees lostthat leverage.
And there's some mixed opinionabout those savings statutes out
there.
I think they're pretty cut anddry, in my opinion.
But there's some folks outthere that think maybe there could
be some carve outs with themthat maybe they applied to.
You know, if there's a missingnotary seal, for example, maybe it
(17:22):
doesn't apply there.
But if the notary failed tofill in the borrower's name and acknowledge
it, maybe it's covered.
But for the most part, we'veheard from title insurance companies
that their title insuranceclaims basically went away with respect
to the defective notaryacknowledgment since these saving
statutes started gettingpassed, they're very lender friendly,
these particular laws.
So yeah, the one we weredealing with was the way the notary,
(17:42):
like the language above, itwasn't clear whether the person came
in person or how theyvalidated them.
So they're looking at it fromthat point of view of like, oh, this
isn't kosher.
Correct me if I'm wrong, butthe trustees get more fees or get
to collect more money onunsecured debt than secured debt.
Yeah, it sounds about right.
(18:04):
It is remarkable how there wasan attorney in Georgia as well that
was all over that stuff.
And there's a lot of stuff outthere in Georgia about execution.
And you have to have oneunofficial witness and one official
witness and these documentsand this attorney was just all over
these improper executions andstuff like that.
And it really is a shame.
It really shouldn't be like that.
I think that was kind of thespirit of the saving statute is,
(18:24):
you know, if the personappeared and the notary acknowledged
it, but you know, there's somesort of defective way in which they
executed it should not benefita bankruptcy trustee, for example,
just make it completely unsecured.
It just seems unconscionableand kind of shocks the conscience
that $100,000, what would be asecured debt in bankruptcy would
be automatically deemedunsecured just because there's, I
(18:47):
guess, a name not filled in onnotary acknowledgment.
So I would think it would bealmost like a scrivener error in
some sense or a little, youknow, a little beyond it.
And we've seen ones whereagain recently that the exhibit A
and the security instrument,which is the legal description, they
slapped the wrong legaldescription in there.
And every other doc is correct.
But you know, that's a wholereformation of that mortgage that
(19:10):
has to go through that whole process.
And now attorneys look at itand be like, how did they miss it
this bad?
Yeah.
And you know, I think whathappens in those situations that
I've talked at seminars andstuff about this subject, I think,
you know, practicallyspeaking, these, these when there
was high volume closings goingon, there's multiple files across
a person's desk.
And of course, this is backwhen we dealt with paper, you know,
(19:33):
and they just literally likeexactly like you said, Chris, they
had probably two exhibits thatthey were working on there.
They printed them out off the printer.
They just literally swapped,you know, they probably were working
on two closings at the sametime and literally swapped legal
descriptions.
And the curative is exactly asyou mentioned.
Well, we probably start with atitle claim and sometimes the title
insurance companies literallywant a band aid for that issue.
So we, we have a litigationdepartment, our firm, that literally
(19:54):
we, a whole portion of ourdepartment is devoted to title curative
and doing reformation actionsand claritory judgment actions like
you were referring to, toliterally get the court to reform
that security instrument toinclude the correct legal description.
So, yeah, it's.
So the other aspect that Iknow you do a lot of work in as we
(20:15):
pivot, which to me, I actuallythink foreclosure state by state
is pretty bread and butter.
You just got some littlenuances and so forth.
The place that my brain justimplodes is on bankruptcy because
the northern district of thisstate does it differently than the
(20:35):
southern district of thisstate or so forth.
In regards to is the mortgagepayment included in the bankruptcy
or is it outside the bankruptcy?
Not only the rears.
And there's so many nuanceswith bankruptcies and proof of claims
and having a good attorneyalso on your side, and I know some
(20:56):
people also use servicers tofile some of these documentations.
And I typically rely more onthe attorney side of things, A, because
they have more experience withit and also B, when it starts getting
dismissed or things get alittle hairy at any point in time,
it's just better to rely on them.
Whether you're filing a Motionfor relief if the borrower is not
(21:18):
paying, because attorneys likeyourself who had that experience
on the bankruptcy side know,okay, the borrower is 60 days behind.
I wouldn't file motion reliefbecause this judge or this district
doesn't consider it unlessit's 120 or 90 days.
Share a little bit ofexperience on the BK side?
Yeah, sure, for sure, Chris.
We, you know, I like to tellpeople that the BK for the most part
(21:40):
goes right, right about overhere, which is great because I've
got BK attorneys a messageaway for sure.
I mean, it's imperative reallyin this environment, in this arena
to have exactly what you said,those, you know, not only knowledgeable
in bankruptcy, but in terms ofthe local customs.
And exactly as you said, we'rein all those courts in our footprint
states, you know, that that isliterally just a flip of a message
(22:03):
or an email over to that group.
And that's exactly what they do.
You said it exactly right.
I mean, they know the nuancesof those courts.
They can give strategic adviceas to exactly the style of proof
of claims and when and thatkind of thing.
So in this environment, thesedefault firms, you have to have each
and every one of these departments.
Just when you think file isgoing to go to sale, we spin into
(22:23):
a title issue.
So that goes to our titlegroup and then we've got this complex
bankruptcy that gets filed andit spins over there.
And it really is kind of very interesting.
And what's interesting too iswe might spend all this time working
on a title issue only to havethat resolved, to then have a bankruptcy
filed, you know, and then itspend spins over to that department.
So it touches a lot ofdifferent hands, amazingly, before
(22:45):
it ever, before it everreaches its final destination, for
sure.
But the bankruptcy stuff,yeah, it's critical for sure.
Yeah.
And interesting enough, I'm atthe Chapter 13 Trustee Conference
in Chicago.
So, hey, we're in all kinds ofbankruptcy stuff.
I don't have to deal with iton a daily basis.
So my bankruptcy attorney'sdown in the sessions right now.
(23:07):
I'm curious one thing that Isee on social media a lot and just
curious if you actually hearthis, and I kind of feel bad for
both of you when this occursand so forth.
But sometimes I seeinexperienced lenders blame the attorneys
(23:28):
for things completely out oftheir control.
Like, hey, like a lawsuitdidn't go away, they wanted or they,
they didn't get, you know, thehearing got delayed or the borrower
keeps pushing things, or youknow, there's everything that happens
there's certain things in yourcontrol and certain things not in
your control.
But the thing I see sometimespeople look at attorneys as everything's
(23:53):
in their control.
And if it doesn't go the way Iwanted it to go, then it's your fault.
Do you guys ever see that?
We always take blame.
You're the client.
We listen to what you say, wedo what you want us to do.
I mean, if it's something wecan't do, we'll let you know as we.
Wrap up this episode.
(24:13):
Thank you for coming on.
Thank you for also sponsoringthe Paper Trail Conference, which
is hosted September 18th to20th in Chandler, Arizona.
People listening, hope you canmake it.
Definitely recommend stoppingby and learning about all the services
they provide.
Because one of the things thata lot of investors look for is what's
(24:34):
the one stop shop to getcertain things done.
And that's something that, youknow, your, your firm provides.
It just handles everything.
So you don't have to go tothis company for this or this company
for that.
Like you mentioned, Josh, it'sthe default services side.
So when a borrower goes intodefault, you know, from the moment
they do, it's, hey, here's theinformation, here's a collateral
(24:56):
file.
Can you start even with thedemand letter?
Because I know some peoplelike to send their own demand letter.
We always just have theattorney do because we want to make
sure again, goes back to whatJosh says.
It meets whatever requirementsare in that security instrument.
So highly recommend that Jane.
Josh, any final thoughts andways people could reach out to you?
(25:20):
Yeah, sure.
I mean, we're here in ourstates as we indicated, and you know,
just, you need anything, be atthe conference, you have any questions,
we're on a panel at theconference as well.
So there'll be other attorneysfrom several other states.
So, you know, if people havequestions, they can come up and ask
(25:42):
us afterwards as well.
Yeah, highly recommend that.
Because when you actuallythink about it, attorneys are not.
Attorneys are expensive.
And when you can get a groupof attorneys up there on a panel
for an hour, basically youpretty much just paid for your ticket
for the entry.
Plus, you know, it's amazing.
(26:04):
Buy an attorney a coffee or alunch as well.
They love that.
Highly recommend that you takecare of your attorneys because when
you do that, your attorneysintend to take care of you is what
I found.
Yeah, we're always availableby email.
We get contacted on the ones,Chris, that you're talking about
these kind of outside the boxsituations that no one's seen before
(26:25):
that kind of thing.
And, you know, we encouragefolks send us an email, and there
is somebody, I'm convinced, atour firm that has probably seen those
facts before, and we canspread the word and get an answer.
So we're always available toanswer any questions you might have.
Well, thank you for coming on today.
I enjoyed speaking with you,and I look forward to seeing you
(26:46):
in a few months.
Yeah, well, thank you forhaving us.
We're looking forward to the conference.
Thanks for having us, Chris.
Thank you all.
All right.
Appreciate it.
Jane and Josh, how are youdoing today?
Wonderful.
How are you, Chris?
Great, Chris.
Good.
We were just talking beforerecording some of the crazy nightmare
stories we have in the lending space.
And that's part of why, youknow, we have Jane and Josh on today
is they can be the servicesthey provide, the little angel on
(01:05):
your shoulder of getting youout of trouble or having you deal
with some challenging borrowers.
So, you know, Jane, if youwant to start and tell us a little,
a little bit more aboutyourself and your services.
Yeah, sure.
So Josh and I are both withthe law firm of Reuben Lublin.
We are in Georgia, Alabama,Mississippi, Tennessee, Florida and
(01:27):
Arkansas.
We handle all forms of defaultservices and have been around for
a very long time.
But the group that we belongto that will be at your conference
is called Default AttorneyGroup dag.
And it's a group of sevencreditor rights firms that got together
(01:49):
to do educational events forservicers, lenders, note buyers,
the whole gamut.
And you know, we're, we'rehere, we're 20 plus states, I believe,
with DAG now.
So, yeah, we just try to helpyou guys out when you have legal
issues or foreclosures,bankruptcies, evictions, whatever.
That's what we do.
(02:11):
One of the things that I findextremely important is communication
and just knowing where files stand.
And that's something thatthroughout the course of working
with the firms affiliated hasbeen just that communication piece
and understanding what isgoing on or the assistance that needed
(02:32):
at any point in time or the documents.
That communication piece to meand for people listening, you know,
when you're evaluatingservices is a critical component.
And when you aren't gettingresponses, it can get extremely frustrating
because we know time is moneyin our business.
So that's something that Iappreciate and just want to say thank
(02:53):
you to both of you becausethat's something that we add tremendous
value to our team.
And I know Larisa is excitedwhen she works with you guys.
Well, thank you for that.
So those are great words.
So I kind of dive a little bitinto, you know, you mentioned, you
know, 20 plus states and so forth.
So now you can handle then,you know, both judicial, you're in
(03:16):
both judicial and non judicialbecause you mentioned, you know,
Florida and some of the other states.
And for people listening,again, some people know the differences.
But can you provide a littlebit background just on some of the
main differences between ajudicial and non judicial state?
Yeah, go ahead, Josh.
Sure.
Yeah, sure.
I'd be happy to take that one.
(03:36):
So the state obviously is setout is set out that way.
And the security instruments,Chris, are tailored to that state.
For example, Tennessee is anon judicial state.
So we have what's called adeed of trust as a security instrument.
The deed of trust is a threeparty instrument.
We've got the borrower, thelender and a trustee.
And that's really the rolethat Reuben Loveland serves.
We end up being the substitute trustee.
(03:56):
Usually there's just aplaceholder trustee in the security
instrument and then will besubstituted in later.
That deed of trust gives thepower, the non judicial power of
sale to the trustee to stayoutside the court system and be able
to hold a foreclosure salebasically on the courthouse step.
So obviously there are noticeprotocols in that security instrument
that must be followed.
(04:17):
Our non judicial footprintstates, Tennessee, Georgia, Mississippi,
Alabama, Arkansas, these areswift foreclosure states.
And the power of sale existsthere in those states versus the
judicial system which is justa completely different animal.
It's just, we're just talkingabout a completely different world.
That is literally as it sounds.
It is a true judicial processin every sense of the word.
There is a complaint that isfiled, service has to be served on
(04:40):
all of the parties.
So not just the borrower.
But if there's been a newowner that's been deeded to the property,
they have to be providednotice and then any subordinate lien
holders and then of course atime period in which these folks
have to respond to the lawsuitand then some will respond, some
won't.
So you're getting you know,orders with some defendants.
And anyway so it is, it istruly a, the judicial side is, is,
(05:00):
is, is every sense of thatword is a judicial process.
Whereas again the totalopposite spectrum and that's, that's
really been, we recently movedinto Florida before.
We've just been primarily anon judicial focus practice.
And it is really quite a,quite a difference between those,
those, those two, those two processes.
But.
Right.
Cause like the timeline isaverage for the Non Judicial is 69
(05:22):
days, you know, and thenyou've got the judicial which could
take year more longerdepending on all the issues.
So I found that if youmentioned the non judicial, you know,
typically you know, two orthree months and so forth on the
judicial side if you're luckyto get the borrower served within
(05:43):
that period of time, you are lucky.
And we found in states likeFlorida, borrowers can get creative
and they can dodge service andyou know, there's just, you know,
then you have to you know,provide certain notices.
We've got a loan in WashingtonD.C. that the borrowers dodge dodge
services.
Is my New England accentcoming out.
And the court would not deema, I forget like supplemental service
(06:08):
until we've attempted 12different times to reach the borrower
and should prove that we'vetried like 12 times and some of that
stuff, you know, let's behonest, it's ludicrous.
So as an investor the nonjudicial side is much more streamlined
because you can control it.
Correct, John Josh versus thatjudicial state.
(06:29):
Yeah, it's statutory but youknow the statutes will often defer
back to the security instrument.
So you're literally justfollowing the terms of security instrument
which basically say run adsfor X amount of days, provide notice
in X way and once that is doneyou're ready to hold your sale at
the Cordell steps.
So it is, it is, it is verystreamlined, is very, you know, by
(06:51):
the book.
But it also is very swiftuntil we run into a myriad of title
type stuff that we could talkabout if you want to talk about that.
But certainly if title comesback clean and we get the documents
back from the investors thatwe need to file, we have to record
an appointment appointing usas that trustee.
And in some states by law andso sometimes we can't even run ads
until we're appointed subsidiary.
(07:11):
So follow these guidelines butwe work through them, we've got systems
in place for that and we canget you to the courtile steps in
a timely fashion in those nonjudicial time states.
Yep.
And you mentioned also, whichis actually where I was going to
spin into is the three thingswe typically try and partner with
(07:32):
our council on is first ofcourse the default slash, foreclosure
side of things.
Second is title, title reviewand that component.
And third of course is bankruptcy.
And that's I think anotherkey, key factor where you know yourselves
and the group have tons ofexperience where if something comes
(07:53):
back and whether it's a lostnote affidavit in a state or the
title might have, the legaldescription might have to be corrected
out of order assignment orsomething needs to be done.
You know, that's havingsomebody like yourselves who can
deal with those issues alsoand assist.
And again certain documentsyou have to chase down but at least
(08:13):
providing us, hey, this iswhat you're going to need up front
or early on so it's not last second.
And that's something againJoshua talk and Jane a little more
about that too.
Yeah, absolutely, Chris.
I mean that's really what'swhat we do.
You know, we're a default firmbut you could almost say we're a
title firm and that as much aswe are a default firm, we have a
group that that's what thegroup does.
(08:34):
That's kind of where I falland lean is on the title side.
I used to be a closingattorney for years, so I see a lot
of stuff on the backside whenwe're reviewing title for foreclosure.
Where sometimes I can say Iprobably know what happened because
from that closing side experience.
But we have a dedicated groupthat really all it does is file title
claims and do manual curative.
(08:55):
And that, that really is the question.
You know, some loans, youknow, there should be title insurance
in place most of the time.
Obviously, you know, a lendershould be getting lenders title insurance.
It is a significant tool onthe default side in terms of filing
claims and, and gettingletters of indemnity to allow us
to get to the courthouse steps.
Sometimes with GSE loansthat's not really an option.
There's GSEs out therebasically that you cannot use letters
(09:17):
of indemnity, these, thesetitle tools that we use.
But you know, on conventionalproducts and that kind of thing,
we can get letters of indemnity.
Basically we put the titleinsurance company on notice of the
title issue.
They evaluate it.
If it's something they thinkis a ripe, significant, serious,
almost fatal defect, they canchoose to retain counsel and cure
that.
And you know, that's of notebecause more and more we have files
(09:38):
where when that happens, a lotof times these tit claims can drag
on for a year.
It almost turned into ajudicial foreclosure because of this
title claim floating out there.
And basically the titleinsurance company is saying, yeah,
you really can't go to saleuntil this matter is cured.
Once it's been cured.
And a lot of times what theyhave to do in that claim is retain
counsel and file a titlecurative lawsuit.
So it's not a judicialforeclosure, it's a title cured of
(09:59):
lawsuit.
We will have a file, sometimesgo on six months, a year.
Eventually we get this courtorder that says the security instrument's
been reformed to correct thelegal description, for example, and
then we can go to do our nonjudicial sale.
And so there's a myriad oftitle issues, Chris, that we see
and deal with.
Senior unreleased liens is areal, you know, popular one if you
will.
A lot of times, you know,there's proof that those were satisfied
(10:20):
at closing.
And so we can band aid thatwith a letter of indemnity, but we'll
have some pretty Significantfatal defects.
We literally have two peopleon title and only one of them signed
our security instrument.
We'll have a complete missinghalf interest.
And so that, that's somethingthat if they can't go get a deed
from that person that it willprobably be litigated.
And so, you know, in a perfectworld, title will be clean and we'll
get you to sell quick.
But if it's not, you know,we've got the expertise to steer
(10:43):
you in the right direction onhow to get this stuff resolved.
Sometimes we'll just do thequick manual curative ourself.
You mentioned, you know, affidavits.
We'll use affidavits both inthe assignment arena like you mentioned,
with out of order type stuff.
And we'll also use affidavitsto cure title.
In some states we can do likeGeorgia, we can do a title affidavit
where a license attorney cansay, yeah, this is kind of what happens,
this is what's correct and wecan put that down on our chain and
(11:04):
proceed.
So we've got the expertise andthe tools to navigate through this
sea of title issues, if you will.
Yeah, I have one right nowthat's been going on for three plus
years.
Title claim.
What happened was there was afirst and then a second mortgage
on the property and theborrower refinanced the first and
(11:24):
you know, so they refinancedthe first.
That new lender stepped in to,you know, usurp or replace that first
position.
They also did get asubordination agreement from the
second, but the second wassigned by like a power of attorney
that the property ended upgetting sold for a lot less.
The second got wiped out atthe sale because the borrower filed
(11:46):
bankruptcy and they filed aclaim saying they never authorized
the subordination.
And they're also trying toclaim that because they were recorded
before the refinance thatit's, they should be in first position.
But which every law in theland says if on a refinance, you
know, you step into thatposition as long as, you know, they
(12:07):
increase and all that stuff.
So that one's been going onthree plus years.
We actually got a, we quoteunquote one two weeks ago, a month
ago, but then the borrowerfiled an appeal.
Then of course they filedappeal after the deadline, but now
we're waiting on the court tohear if they're going to hear the
appeal.
So now we're just waitingagain and it goes back to any time
(12:28):
you get deal with the courts.
Yeah, without question.
Those are, we, we've seenstuff drag on that long for sure.
It's what you think is goingto be, you review the title and think,
okay, we're going to reviewthis title.
Do we need to do and go to sale?
And the next, you know, inyour case, three years later, we're
still sitting here.
So, and I know there's,there's a lot of, you know, investors
that get upset and want toknow like if there's any, you know,
(12:50):
the holding cost, if you will,in terms of this, while this title
litigation is going on, like,is the title insurance company obligated
to, you know, reimburse forthese holding costs?
And you know, we'll, we'lldefer to the terms of the title policies.
But I think as a whole, Ithink generally no, there's probably
not, you know, it's just kindof unfortunately the, the cost of
business.
So the one we had the propertyactually sold and There was like
(13:11):
$600,000 in the last threeyears sitting in an account.
And I asked my attorney, I'mlike, well, we at least get interest
on that.
He's like, no.
And I'm like, you know, evenat today's interest rates, you know,
it's 3%.
That would have been 18 granda year.
That would have been nice.
Out of curiosity, like, youknow, if one comes to mind, do you
have a crazy case or a crazystory that just pops in your head
(13:33):
like a doozy or just out of curiosity.
When you were mentioned lean,you know, lean priority, the ones
that just always are reallyinteresting are the HELOCs.
Have you heard the termexpression kill letter?
Basically what happens is thestandard fact pattern is a person's
got a first mortgage on theirproperty and then they got a second
HELOC.
Just say the first is $100,000mortgage and the second is a $50,000
(13:54):
HELOC.
As somebody that used to doclosings, I mentioned earlier, it
is vital that the closingattorneys and closing agents really
pay close attention if thereis really an open ended second mortgage.
If it's a closed end mortgage,just a true second mortgage closed
in, then you just pay off thefirst, pay off the second on your
refinance.
And as you mentioned earlier,the new loan jumps in first position
(14:15):
and the other two areextinguished when that second to
heloc.
You've got to take somespecific measures as the closing
attorney to make sure that itis not just paid off, but also closed
down and released.
We had one time where theclosing attorney got a payoff and
may or may not have made aneffort to close out the second.
(14:35):
But basically the person soldhis property and purchased another
property, and he thought thatthe HELOC would just automatically
transfer over to his new property.
We had to go chase this guydown later.
That's why we know he said it.
But basically he thought theHELOC would transfer where literally
before they could even doanything, he had already gone out
and run up.
And I think it was more than50,000 in my example.
(14:55):
I think it was about 100,000.
He had already run that up inthe gap, period there.
So those HELOC stories and notgetting closeout letters, those are
the difficult ones for thetitle insurance companies.
Those are ones usually wherethere could potentially be a fatal
defect that ends up being a payout.
The myth about title insuranceis, you know, title insurance is
a contract of indemnity.
And so it is.
There's this kind of misnomerout there that there's a title issue.
(15:16):
The title insurance companiesjust stroke a check, basically, and
that's not the way it works.
It's literally a contract indemnity.
So if there has not been aloss suffered, the title insurance
company is not obligated toactually pay money.
They're obligated to step inand make the title good or retain
counsel to litigate and clearthese titles.
But a lot of times there'sreally no money going out for the
title insurance.
(15:37):
I think that's a misnomer out there.
That's important peopleunderstand it's a contract of indemnity
title insurance.
We have one situation wherethe notary stamp is incorrect on
a security instrument.
And we let the title companyknow because our attorney picked
that up and said, hey, thisisn't correct.
But because there's no damage,they will might acknowledge it and
(15:59):
may, if there's a loss, defend it.
But until that point in time,we're just like, okay, we're on notice.
Exactly.
And I'm actually glad youbrought up the defective notary acknowledgement.
That's really been a realinteresting development across our
footprint State, there hasbeen legislation and laws enacted
in the last five to seven,eight years to deal with that particular
(16:19):
issue.
What was happening wasbankruptcy trustees were having a
field day.
The first thing thesebankruptcy trustees were doing were
looking at the security instrument.
And if there was a defectivenotary, they were basically saying,
you do not have a validsecurity instrument.
You are unsecured in bankruptcy.
And it was obviously a hugeproblem and a huge issue for lenders.
And so I wish I knew what thefirst state was that accomplished
(16:42):
this, but somebody got it andthen all the other states started
following their lead.
Basically, we refer to it asthe savings statute.
I know Tennessee, Mississippi,maybe Alabama.
I've checked my notes, but Ican tell you definitively Tennessee
has a saving statute thatbasically says that regardless of
the fact that the notary mightbe defective, if the document gets
recorded, it is valid.
(17:02):
And so, interesting enough, assoon as that law passed all these
claims and bankruptcy justdisappeared into thin air.
These bankruptcy trustees lostthat leverage.
And there's some mixed opinionabout those savings statutes out
there.
I think they're pretty cut anddry, in my opinion.
But there's some folks outthere that think maybe there could
be some carve outs with themthat maybe they applied to.
You know, if there's a missingnotary seal, for example, maybe it
(17:22):
doesn't apply there.
But if the notary failed tofill in the borrower's name and acknowledge
it, maybe it's covered.
But for the most part, we'veheard from title insurance companies
that their title insuranceclaims basically went away with respect
to the defective notaryacknowledgment since these saving
statutes started gettingpassed, they're very lender friendly,
these particular laws.
So yeah, the one we weredealing with was the way the notary,
(17:42):
like the language above, itwasn't clear whether the person came
in person or how theyvalidated them.
So they're looking at it fromthat point of view of like, oh, this
isn't kosher.
Correct me if I'm wrong, butthe trustees get more fees or get
to collect more money onunsecured debt than secured debt.
Yeah, it sounds about right.
(18:04):
It is remarkable how there wasan attorney in Georgia as well that
was all over that stuff.
And there's a lot of stuff outthere in Georgia about execution.
And you have to have oneunofficial witness and one official
witness and these documentsand this attorney was just all over
these improper executions andstuff like that.
And it really is a shame.
It really shouldn't be like that.
I think that was kind of thespirit of the saving statute is,
(18:24):
you know, if the personappeared and the notary acknowledged
it, but you know, there's somesort of defective way in which they
executed it should not benefita bankruptcy trustee, for example,
just make it completely unsecured.
It just seems unconscionableand kind of shocks the conscience
that $100,000, what would be asecured debt in bankruptcy would
be automatically deemedunsecured just because there's, I
(18:47):
guess, a name not filled in onnotary acknowledgment.
So I would think it would bealmost like a scrivener error in
some sense or a little, youknow, a little beyond it.
And we've seen ones whereagain recently that the exhibit A
and the security instrument,which is the legal description, they
slapped the wrong legaldescription in there.
And every other doc is correct.
But you know, that's a wholereformation of that mortgage that
(19:10):
has to go through that whole process.
And now attorneys look at itand be like, how did they miss it
this bad?
Yeah.
And you know, I think whathappens in those situations that
I've talked at seminars andstuff about this subject, I think,
you know, practicallyspeaking, these, these when there
was high volume closings goingon, there's multiple files across
a person's desk.
And of course, this is backwhen we dealt with paper, you know,
(19:33):
and they just literally likeexactly like you said, Chris, they
had probably two exhibits thatthey were working on there.
They printed them out off the printer.
They just literally swapped,you know, they probably were working
on two closings at the sametime and literally swapped legal
descriptions.
And the curative is exactly asyou mentioned.
Well, we probably start with atitle claim and sometimes the title
insurance companies literallywant a band aid for that issue.
So we, we have a litigationdepartment, our firm, that literally
(19:54):
we, a whole portion of ourdepartment is devoted to title curative
and doing reformation actionsand claritory judgment actions like
you were referring to, toliterally get the court to reform
that security instrument toinclude the correct legal description.
So, yeah, it's.
So the other aspect that Iknow you do a lot of work in as we
(20:15):
pivot, which to me, I actuallythink foreclosure state by state
is pretty bread and butter.
You just got some littlenuances and so forth.
The place that my brain justimplodes is on bankruptcy because
the northern district of thisstate does it differently than the
(20:35):
southern district of thisstate or so forth.
In regards to is the mortgagepayment included in the bankruptcy
or is it outside the bankruptcy?
Not only the rears.
And there's so many nuanceswith bankruptcies and proof of claims
and having a good attorneyalso on your side, and I know some
(20:56):
people also use servicers tofile some of these documentations.
And I typically rely more onthe attorney side of things, A, because
they have more experience withit and also B, when it starts getting
dismissed or things get alittle hairy at any point in time,
it's just better to rely on them.
Whether you're filing a Motionfor relief if the borrower is not
(21:18):
paying, because attorneys likeyourself who had that experience
on the bankruptcy side know,okay, the borrower is 60 days behind.
I wouldn't file motion reliefbecause this judge or this district
doesn't consider it unlessit's 120 or 90 days.
Share a little bit ofexperience on the BK side?
Yeah, sure, for sure, Chris.
We, you know, I like to tellpeople that the BK for the most part
(21:40):
goes right, right about overhere, which is great because I've
got BK attorneys a messageaway for sure.
I mean, it's imperative reallyin this environment, in this arena
to have exactly what you said,those, you know, not only knowledgeable
in bankruptcy, but in terms ofthe local customs.
And exactly as you said, we'rein all those courts in our footprint
states, you know, that that isliterally just a flip of a message
(22:03):
or an email over to that group.
And that's exactly what they do.
You said it exactly right.
I mean, they know the nuancesof those courts.
They can give strategic adviceas to exactly the style of proof
of claims and when and thatkind of thing.
So in this environment, thesedefault firms, you have to have each
and every one of these departments.
Just when you think file isgoing to go to sale, we spin into
(22:23):
a title issue.
So that goes to our titlegroup and then we've got this complex
bankruptcy that gets filed andit spins over there.
And it really is kind of very interesting.
And what's interesting too iswe might spend all this time working
on a title issue only to havethat resolved, to then have a bankruptcy
filed, you know, and then itspend spins over to that department.
So it touches a lot ofdifferent hands, amazingly, before
(22:45):
it ever, before it everreaches its final destination, for
sure.
But the bankruptcy stuff,yeah, it's critical for sure.
Yeah.
And interesting enough, I'm atthe Chapter 13 Trustee Conference
in Chicago.
So, hey, we're in all kinds ofbankruptcy stuff.
I don't have to deal with iton a daily basis.
So my bankruptcy attorney'sdown in the sessions right now.
(23:07):
I'm curious one thing that Isee on social media a lot and just
curious if you actually hearthis, and I kind of feel bad for
both of you when this occursand so forth.
But sometimes I seeinexperienced lenders blame the attorneys
(23:28):
for things completely out oftheir control.
Like, hey, like a lawsuitdidn't go away, they wanted or they,
they didn't get, you know, thehearing got delayed or the borrower
keeps pushing things, or youknow, there's everything that happens
there's certain things in yourcontrol and certain things not in
your control.
But the thing I see sometimespeople look at attorneys as everything's
(23:53):
in their control.
And if it doesn't go the way Iwanted it to go, then it's your fault.
Do you guys ever see that?
We always take blame.
You're the client.
We listen to what you say, wedo what you want us to do.
I mean, if it's something wecan't do, we'll let you know as we.
Wrap up this episode.
(24:13):
Thank you for coming on.
Thank you for also sponsoringthe Paper Trail Conference, which
is hosted September 18th to20th in Chandler, Arizona.
People listening, hope you canmake it.
Definitely recommend stoppingby and learning about all the services
they provide.
Because one of the things thata lot of investors look for is what's
(24:34):
the one stop shop to getcertain things done.
And that's something that, youknow, your, your firm provides.
It just handles everything.
So you don't have to go tothis company for this or this company
for that.
Like you mentioned, Josh, it'sthe default services side.
So when a borrower goes intodefault, you know, from the moment
they do, it's, hey, here's theinformation, here's a collateral
(24:56):
file.
Can you start even with thedemand letter?
Because I know some peoplelike to send their own demand letter.
We always just have theattorney do because we want to make
sure again, goes back to whatJosh says.
It meets whatever requirementsare in that security instrument.
So highly recommend that Jane.
Josh, any final thoughts andways people could reach out to you?
(25:20):
Yeah, sure.
I mean, we're here in ourstates as we indicated, and you know,
just, you need anything, be atthe conference, you have any questions,
we're on a panel at theconference as well.
So there'll be other attorneysfrom several other states.
So, you know, if people havequestions, they can come up and ask
(25:42):
us afterwards as well.
Yeah, highly recommend that.
Because when you actuallythink about it, attorneys are not.
Attorneys are expensive.
And when you can get a groupof attorneys up there on a panel
for an hour, basically youpretty much just paid for your ticket
for the entry.
Plus, you know, it's amazing.
(26:04):
Buy an attorney a coffee or alunch as well.
They love that.
Highly recommend that you takecare of your attorneys because when
you do that, your attorneysintend to take care of you is what
I found.
Yeah, we're always availableby email.
We get contacted on the ones,Chris, that you're talking about
these kind of outside the boxsituations that no one's seen before
(26:25):
that kind of thing.
And, you know, we encouragefolks send us an email, and there
is somebody, I'm convinced, atour firm that has probably seen those
facts before, and we canspread the word and get an answer.
So we're always available toanswer any questions you might have.
Well, thank you for coming on today.
I enjoyed speaking with you,and I look forward to seeing you
(26:46):
in a few months.
Yeah, well, thank you forhaving us.
We're looking forward to the conference.
Thanks for having us, Chris.
Thank you all.
All right.
Appreciate it.
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The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.