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

Jane and Josh, how are you doing today?

Wonderful.

How are you, Chris?

Great, Chris.

Good.

We were just talking before recording some of the crazy nightmare stories we have in the lending space.

And that's part of why, you know, we have Jane and Josh on today is they can be the services they provide, the little angel on your shoulder of getting you out of trouble or having you deal with some challenging borrowers.

So, you know, Jane, if you want to start and tell us a little, a little bit more about yourself and your services.

Yeah, sure.

So Josh and I are both with the law firm of Reuben Lublin.

We are in Georgia, Alabama, Mississippi, Tennessee, Florida and Arkansas.

We handle all forms of default services and have been around for a very long time.

But the group that we belong to that will be at your conference is called Default Attorney Group dag.

And it's a group of seven creditor rights firms that got together to do educational events for servicers, lenders, note buyers, the whole gamut.

And you know, we're, we're here, we're 20 plus states, I believe, with DAG now.

So, yeah, we just try to help you guys out when you have legal issues or foreclosures, bankruptcies, evictions, whatever.

That's what we do.

One of the things that I find extremely important is communication and just knowing where files stand.

And that's something that throughout the course of working with the firms affiliated has been just that communication piece and understanding what is going on or the assistance that needed at any point in time or the documents.

That communication piece to me and for people listening, you know, when you're evaluating services is a critical component.

And when you aren't getting responses, it can get extremely frustrating because we know time is money in our business.

So that's something that I appreciate and just want to say thank you to both of you because that's something that we add tremendous value to our team.

And I know Larisa is excited when she works with you guys.

Well, thank you for that.

So those are great words.

So I kind of dive a little bit into, 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 both judicial and non judicial because 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 little bit background just on some of the main differences between a judicial and non judicial state?

Yeah, go ahead, Josh.

Sure.

Yeah, sure.

I'd be happy to take that one.

So the state obviously is set out is set out that way.

And the security instruments, Chris, are tailored to that state.

For example, Tennessee is a non judicial state.

So we have what's called a deed of trust as a security instrument.

The deed of trust is a three party instrument.

We've got the borrower, the lender and a trustee.

And that's really the role that Reuben Loveland serves.

We end up being the substitute trustee.

Usually there's just a placeholder trustee in the security instrument and then will be substituted in later.

That deed of trust gives the power, the non judicial power of sale to the trustee to stay outside the court system and be able to hold a foreclosure sale basically on the courthouse step.

So obviously there are notice protocols in that security instrument that must be followed.

Our non judicial footprint states, Tennessee, Georgia, Mississippi, Alabama, Arkansas, these are swift foreclosure states.

And the power of sale exists there in those states versus the judicial system which is just a completely different animal.

It's just, we're just talking about a completely different world.

That is literally as it sounds.

It is a true judicial process in every sense of the word.

There is a complaint that is filed, service has to be served on all of the parties.

So not just the borrower.

But if there's been a new owner that's been deeded to the property, they have to be provided notice and then any subordinate lien holders and then of course a time period in which these folks have to respond to the lawsuit and then some will respond, some won't.

So you're getting you know, orders with some defendants.

And anyway so it is, it is truly a, the judicial side is, is, is, is every sense of that word is a judicial process.

Whereas again the total opposite spectrum and that's, that's really been, we recently moved into Florida before.

We've just been primarily a non 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 is average for the Non Judicial is 69 days, you know, and then you've got the judicial which could take year more longer depending on all the issues.

So I found that if you mentioned the non judicial, you know, typically you know, two or three months and so forth on the judicial side if you're lucky to get the borrower served within that period of time, you are lucky.

And we found in states like Florida, borrowers can get creative and they can dodge service and you know, there's just, you know, then you have to you know, provide certain notices.

We've got a loan in Washington D.C. that the borrowers dodge dodge services.

Is my New England accent coming out.

And the court would not deem a, I forget like supplemental service until we've attempted 12 different times to reach the borrower and should prove that we've tried like 12 times and some of that stuff, you know, let's be honest, it's ludicrous.

So as an investor the non judicial side is much more streamlined because you can control it.

Correct, John Josh versus that judicial state.

Yeah, it's statutory but you know the statutes will often defer back to the security instrument.

So you're literally just following the terms of security instrument which basically say run ads for X amount of days, provide notice in X way and once that is done you're ready to hold your sale at the Cordell steps.

So it is, it is, it is very streamlined, is very, you know, by the book.

But it also is very swift until we run into a myriad of title type stuff that we could talk about if you want to talk about that.

But certainly if title comes back clean and we get the documents back from the investors that we need to file, we have to record an appointment appointing us as that trustee.

And in some states by law and so sometimes we can't even run ads until we're appointed subsidiary.

So follow these guidelines but we work through them, we've got systems in place for that and we can get you to the courtile steps in a timely fashion in those non judicial time states.

Yep.

And you mentioned also, which is actually where I was going to spin into is the three things we typically try and partner with our council on is first of course the default slash, foreclosure side of things.

Second is title, title review and that component.

And third of course is bankruptcy.

And that's I think another key, key factor where you know yourselves and the group have tons of experience where if something comes back and whether it's a lost note affidavit in a state or the title might have, the legal description might have to be corrected out of order assignment or something needs to be done.

You know, that's having somebody like yourselves who can deal with those issues also and assist.

And again certain documents you have to chase down but at least providing us, hey, this is what you're going to need up front or early on so it's not last second.

And that's something again Joshua talk and Jane a little more about that too.

Yeah, absolutely, Chris.

I mean that's really what's what we do.

You know, we're a default firm but you could almost say we're a title firm and that as much as we are a default firm, we have a group that that's what the group does.

That's kind of where I fall and lean is on the title side.

I used to be a closing attorney for years, so I see a lot of stuff on the backside when we're reviewing title for foreclosure.

Where sometimes I can say I probably know what happened because from that closing side experience.

But we have a dedicated group that really all it does is file title claims and do manual curative.

And that, that really is the question.

You know, some loans, you know, there should be title insurance in place most of the time.

Obviously, you know, a lender should be getting lenders title insurance.

It is a significant tool on the default side in terms of filing claims and, and getting letters of indemnity to allow us to get to the courthouse steps.

Sometimes with GSE loans that's not really an option.

There's GSEs out there basically that you cannot use letters of indemnity, these, these title tools that we use.

But you know, on conventional products and that kind of thing, we can get letters of indemnity.

Basically we put the title insurance company on notice of the title issue.

They evaluate it.

If it's something they think is a ripe, significant, serious, almost fatal defect, they can choose to retain counsel and cure that.

And you know, that's of note because more and more we have files where when that happens, a lot of times these tit claims can drag on for a year.

It almost turned into a judicial foreclosure because of this title claim floating out there.

And basically the title insurance company is saying, yeah, you really can't go to sale until this matter is cured.

Once it's been cured.

And a lot of times what they have to do in that claim is retain counsel and file a title curative lawsuit.

So it's not a judicial foreclosure, it's a title cured of lawsuit.

We will have a file, sometimes go on six months, a year.

Eventually we get this court order that says the security instrument's been reformed to correct the legal description, for example, and then we can go to do our non judicial sale.

And so there's a myriad of title issues, Chris, that we see and deal with.

Senior unreleased liens is a real, you know, popular one if you will.

A lot of times, you know, there's proof that those were satisfied at closing.

And so we can band aid that with a letter of indemnity, but we'll have some pretty Significant fatal defects.

We literally have two people on title and only one of them signed our security instrument.

We'll have a complete missing half interest.

And so that, that's something that if they can't go get a deed from that person that it will probably be litigated.

And so, you know, in a perfect world, 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 you in the right direction on how to get this stuff resolved.

Sometimes we'll just do the quick manual curative ourself.

You mentioned, you know, affidavits.

We'll use affidavits both in the assignment arena like you mentioned, with out of order type stuff.

And we'll also use affidavits to cure title.

In some states we can do like Georgia, we can do a title affidavit where a license attorney can say, yeah, this is kind of what happens, this is what's correct and we can put that down on our chain and proceed.

So we've got the expertise and the tools to navigate through this sea of title issues, if you will.

Yeah, I have one right now that's been going on for three plus years.

Title claim.

What happened was there was a first and then a second mortgage on the property and the borrower refinanced the first and you know, so they refinanced the first.

That new lender stepped in to, you know, usurp or replace that first position.

They also did get a subordination agreement from the second, but the second was signed by like a power of attorney that the property ended up getting sold for a lot less.

The second got wiped out at the sale because the borrower filed bankruptcy and they filed a claim saying they never authorized the subordination.

And they're also trying to claim that because they were recorded before the refinance that it's, they should be in first position.

But which every law in the land says if on a refinance, you know, you step into that position as long as, you know, they increase and all that stuff.

So that one's been going on three plus years.

We actually got a, we quote unquote one two weeks ago, a month ago, but then the borrower filed an appeal.

Then of course they filed appeal after the deadline, but now we're waiting on the court to hear if they're going to hear the appeal.

So now we're just waiting again and it goes back to any time you get deal with the courts.

Yeah, without question.

Those are, we, we've seen stuff drag on that long for sure.

It's what you think is going to be, you review the title and think, okay, we're going to review this title.

Do we need to do and go to sale?

And the next, you know, in your 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 to know like if there's any, you know, 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 for these holding costs?

And you know, we'll, we'll defer to the terms of the title policies.

But I think as a whole, I think generally no, there's probably not, you know, it's just kind of unfortunately the, the cost of business.

So the one we had the property actually sold and There was like $600,000 in the last three years sitting in an account.

And I asked my attorney, I'm like, well, we at least get interest on that.

He's like, no.

And I'm like, you know, even at today's interest rates, you know, it's 3%.

That would have been 18 grand a year.

That would have been nice.

Out of curiosity, like, you know, if one comes to mind, do you have a crazy case or a crazy story that just pops in your head like a doozy or just out of curiosity.

When you were mentioned lean, you know, lean priority, the ones that just always are really interesting are the HELOCs.

Have you heard the term expression kill letter?

Basically what happens is the standard fact pattern is a person's got a first mortgage on their property and then they got a second HELOC.

Just say the first is $100,000 mortgage and the second is a $50,000 HELOC.

As somebody that used to do closings, I mentioned earlier, it is vital that the closing attorneys and closing agents really pay close attention if there is 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 the first, pay off the second on your refinance.

And as you mentioned earlier, the new loan jumps in first position and the other two are extinguished when that second to heloc.

You've got to take some specific measures as the closing attorney to make sure that it is not just paid off, but also closed down and released.

We had one time where the closing attorney got a payoff and may or may not have made an effort to close out the second.

But basically the person sold his property and purchased another property, and he thought that the HELOC would just automatically transfer over to his new property.

We had to go chase this guy down later.

That's why we know he said it.

But basically he thought the HELOC would transfer where literally before they could even do anything, he had already gone out and run up.

And I think it was more than 50,000 in my example.

I think it was about 100,000.

He had already run that up in the gap, period there.

So those HELOC stories and not getting closeout letters, those are the difficult ones for the title insurance companies.

Those are ones usually where there could potentially be a fatal defect that ends up being a payout.

The myth about title insurance is, you know, title insurance is a contract of indemnity.

And so it is.

There's this kind of misnomer out there that there's a title issue.

The title insurance companies just stroke a check, basically, and that's not the way it works.

It's literally a contract indemnity.

So if there has not been a loss suffered, the title insurance company is not obligated to actually pay money.

They're obligated to step in and make the title good or retain counsel to litigate and clear these titles.

But a lot of times there's really no money going out for the title insurance.

I think that's a misnomer out there.

That's important people understand it's a contract of indemnity title insurance.

We have one situation where the notary stamp is incorrect on a security instrument.

And we let the title company know because our attorney picked that up and said, hey, this isn't correct.

But because there's no damage, they will might acknowledge it and 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 you brought up the defective notary acknowledgement.

That's really been a real interesting development across our footprint State, there has been legislation and laws enacted in the last five to seven, eight years to deal with that particular issue.

What was happening was bankruptcy trustees were having a field day.

The first thing these bankruptcy trustees were doing were looking at the security instrument.

And if there was a defective notary, they were basically saying, you do not have a valid security instrument.

You are unsecured in bankruptcy.

And it was obviously a huge problem and a huge issue for lenders.

And so I wish I knew what the first state was that accomplished this, but somebody got it and then all the other states started following their lead.

Basically, we refer to it as the savings statute.

I know Tennessee, Mississippi, maybe Alabama.

I've checked my notes, but I can tell you definitively Tennessee has a saving statute that basically says that regardless of the fact that the notary might be defective, if the document gets recorded, it is valid.

And so, interesting enough, as soon as that law passed all these claims and bankruptcy just disappeared into thin air.

These bankruptcy trustees lost that leverage.

And there's some mixed opinion about those savings statutes out there.

I think they're pretty cut and dry, in my opinion.

But there's some folks out there that think maybe there could be some carve outs with them that maybe they applied to.

You know, if there's a missing notary seal, for example, maybe it doesn't apply there.

But if the notary failed to fill in the borrower's name and acknowledge it, maybe it's covered.

But for the most part, we've heard from title insurance companies that their title insurance claims basically went away with respect to the defective notary acknowledgment since these saving statutes started getting passed, they're very lender friendly, these particular laws.

So yeah, the one we were dealing with was the way the notary, like the language above, it wasn't clear whether the person came in person or how they validated them.

So they're looking at it from that point of view of like, oh, this isn't kosher.

Correct me if I'm wrong, but the trustees get more fees or get to collect more money on unsecured debt than secured debt.

Yeah, it sounds about right.

It is remarkable how there was an attorney in Georgia as well that was all over that stuff.

And there's a lot of stuff out there in Georgia about execution.

And you have to have one unofficial witness and one official witness and these documents and this attorney was just all over these improper executions and stuff like that.

And it really is a shame.

It really shouldn't be like that.

I think that was kind of the spirit of the saving statute is, you know, if the person appeared and the notary acknowledged it, but you know, there's some sort of defective way in which they executed it should not benefit a bankruptcy trustee, for example, just make it completely unsecured.

It just seems unconscionable and kind of shocks the conscience that $100,000, what would be a secured debt in bankruptcy would be automatically deemed unsecured just because there's, I guess, a name not filled in on notary acknowledgment.

So I would think it would be almost like a scrivener error in some sense or a little, you know, a little beyond it.

And we've seen ones where again recently that the exhibit A and the security instrument, which is the legal description, they slapped the wrong legal description in there.

And every other doc is correct.

But you know, that's a whole reformation of that mortgage that has to go through that whole process.

And now attorneys look at it and be like, how did they miss it this bad?

Yeah.

And you know, I think what happens in those situations that I've talked at seminars and stuff about this subject, I think, you know, practically speaking, these, these when there was high volume closings going on, there's multiple files across a person's desk.

And of course, this is back when we dealt with paper, you know, and they just literally like exactly like you said, Chris, they had probably two exhibits that they 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 same time and literally swapped legal descriptions.

And the curative is exactly as you mentioned.

Well, we probably start with a title claim and sometimes the title insurance companies literally want a band aid for that issue.

So we, we have a litigation department, our firm, that literally we, a whole portion of our department is devoted to title curative and doing reformation actions and claritory judgment actions like you were referring to, to literally get the court to reform that security instrument to include the correct legal description.

So, yeah, it's.

So the other aspect that I know you do a lot of work in as we pivot, which to me, I actually think foreclosure state by state is pretty bread and butter.

You just got some little nuances and so forth.

The place that my brain just implodes is on bankruptcy because the northern district of this state does it differently than the southern district of this state or so forth.

In regards to is the mortgage payment included in the bankruptcy or is it outside the bankruptcy?

Not only the rears.

And there's so many nuances with bankruptcies and proof of claims and having a good attorney also on your side, and I know some people also use servicers to file some of these documentations.

And I typically rely more on the attorney side of things, A, because they have more experience with it and also B, when it starts getting dismissed or things get a little hairy at any point in time, it's just better to rely on them.

Whether you're filing a Motion for relief if the borrower is not paying, because attorneys like yourself who had that experience on the bankruptcy side know, okay, the borrower is 60 days behind.

I wouldn't file motion relief because this judge or this district doesn't consider it unless it's 120 or 90 days.

Share a little bit of experience on the BK side?

Yeah, sure, for sure, Chris.

We, you know, I like to tell people that the BK for the most part goes right, right about over here, which is great because I've got BK attorneys a message away for sure.

I mean, it's imperative really in this environment, in this arena to have exactly what you said, those, you know, not only knowledgeable in bankruptcy, but in terms of the local customs.

And exactly as you said, we're in all those courts in our footprint states, you know, that that is literally just a flip of a message or an email over to that group.

And that's exactly what they do.

You said it exactly right.

I mean, they know the nuances of those courts.

They can give strategic advice as to exactly the style of proof of claims and when and that kind of thing.

So in this environment, these default firms, you have to have each and every one of these departments.

Just when you think file is going to go to sale, we spin into a title issue.

So that goes to our title group and then we've got this complex bankruptcy that gets filed and it spins over there.

And it really is kind of very interesting.

And what's interesting too is we might spend all this time working on a title issue only to have that resolved, to then have a bankruptcy filed, you know, and then it spend spins over to that department.

So it touches a lot of different hands, amazingly, before it ever, before it ever reaches its final destination, for sure.

But the bankruptcy stuff, yeah, it's critical for sure.

Yeah.

And interesting enough, I'm at the Chapter 13 Trustee Conference in Chicago.

So, hey, we're in all kinds of bankruptcy stuff.

I don't have to deal with it on a daily basis.

So my bankruptcy attorney's down in the sessions right now.

I'm curious one thing that I see on social media a lot and just curious if you actually hear this, and I kind of feel bad for both of you when this occurs and so forth.

But sometimes I see inexperienced lenders blame the attorneys for things completely out of their control.

Like, hey, like a lawsuit didn't go away, they wanted or they, they didn't get, you know, the hearing got delayed or the borrower keeps pushing things, or you know, there's everything that happens there's certain things in your control and certain things not in your control.

But the thing I see sometimes people look at attorneys as everything's in their control.

And if it doesn't go the way I wanted 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, we do what you want us to do.

I mean, if it's something we can't do, we'll let you know as we.

Wrap up this episode.

Thank you for coming on.

Thank you for also sponsoring the Paper Trail Conference, which is hosted September 18th to 20th in Chandler, Arizona.

People listening, hope you can make it.

Definitely recommend stopping by and learning about all the services they provide.

Because one of the things that a lot of investors look for is what's the one stop shop to get certain things done.

And that's something that, you know, your, your firm provides.

It just handles everything.

So you don't have to go to this company for this or this company for that.

Like you mentioned, Josh, it's the default services side.

So when a borrower goes into default, you know, from the moment they do, it's, hey, here's the information, here's a collateral file.

Can you start even with the demand letter?

Because I know some people like to send their own demand letter.

We always just have the attorney do because we want to make sure again, goes back to what Josh says.

It meets whatever requirements are in that security instrument.

So highly recommend that Jane.

Josh, any final thoughts and ways people could reach out to you?

Yeah, sure.

I mean, we're here in our states as we indicated, and you know, just, you need anything, be at the conference, you have any questions, we're on a panel at the conference as well.

So there'll be other attorneys from several other states.

So, you know, if people have questions, they can come up and ask us afterwards as well.

Yeah, highly recommend that.

Because when you actually think about it, attorneys are not.

Attorneys are expensive.

And when you can get a group of attorneys up there on a panel for an hour, basically you pretty much just paid for your ticket for the entry.

Plus, you know, it's amazing.

Buy an attorney a coffee or a lunch as well.

They love that.

Highly recommend that you take care of your attorneys because when you do that, your attorneys intend to take care of you is what I found.

Yeah, we're always available by email.

We get contacted on the ones, Chris, that you're talking about these kind of outside the box situations that no one's seen before that kind of thing.

And, you know, we encourage folks send us an email, and there is somebody, I'm convinced, at our firm that has probably seen those facts before, and we can spread the word and get an answer.

So we're always available to answer any questions you might have.

Well, thank you for coming on today.

I enjoyed speaking with you, and I look forward to seeing you in a few months.

Yeah, well, thank you for having us.

We're looking forward to the conference.

Thanks for having us, Chris.

Thank you all.

All right.

Appreciate it.