Bankruptcy, Balance Sheets & Roundtable Real Talk with Kent McPhail

Host: David Wharton

Episode Title: Bankruptcy, Balance Sheets & Roundtable Real Talk with Kent McPhail

Duration: Approximately 9 minutes and 20 seconds

Episode Summary:
In this episode of MP Access, Kent McPhail of McPhail Sanchez LLP joins us from the Legal League Spring Servicer Summit to unpack key legal challenges facing servicers and law firms today. Kent discusses highlights from the roundtable discussions he led, with topics including payment supplements, bankruptcy timing, and keeping litigation in-house. He also shares insights on judicial vs. non-judicial foreclosures, and the importance of proactive file maintenance to avoid curtailments. Wrapping up, Kent reflects on the relationships he’s built through Legal League and how they even led to co-hosting a podcast of his own.

Key Discussion:

• Roundtable insights on payment supplements and bankruptcy
• The case for retaining default litigation in-house
• Challenges in judicial foreclosure states post-Shemi
• File maintenance and curtailment risks in GSE reviews
• Legal League relationships, education, and “What the M” podcast

Resources & Links:

• MortgagePoint Magazine
• Contact Us

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Transcript

All right. Welcome back to Legally Spring Servicers Summit here in Dallas. We are talking to some of our speakers and panelists and other luminaries here from the legal event speaking with us now we have Kent McPhail. Kent, welcome to our podcast. Thank you very much. It's a pleasure to be here, but it's a pleasure to get to speak at the summit.

And, Yeah. Glad to be here. Absolutely. Well, I know that you have been helping lead some of our roundtable discussions today. Could you talk about some of the experience? So I thought I've heard really good things about, people's experiences with those. So the roundtable discussions are actually one of my favorite things that we do each year at the Spring summit.

And it's just a forum that works exceptionally well because, you know, we're sitting there at the table, you've got like five different groups of tables together. And I'm always fascinated by how each separate table will come up with things or thoughts about the issues that, that we that I hadn't even thought about it out table. And so it's a it's a very it's educational.

You know, some of the topics we went over the, the new payment supplement program, I think that there are a lot of challenges that servicers will face. Law firms will face, particularly as it relates to bankruptcies and whether or not these supplements are done pre bankruptcy or during the pendency of a chapter 13. But anyway, that's that we talked about that.

We talked about an issue that I think would be particularly challenging and most so most out in mostly in judicial states, judicial foreclosure states, which, you know, as these different laws make programs happen and you've got monies being put on, and then you have defaults. And ultimately, when it gets time that somebody has to go testify against what the actual balance is, I think that can be a real challenge because it's got to be accurate.

It's got to be right. And so but I mean, in the end, I think anything that will work towards keeping people in their homes, helping people save their homes is a win win. Yeah. And, you know, it's it's never a good thing when a foreclosure happens. Servicers lose money, people lose their homes. It's life changing. So, we also talked about and one of the issues that's near and dear to my heart, where it was the we talked about keeping litigation in-house or keeping litigation.

And by that what we mean is a lot of the default servicing farms. We've been doing this work. I've been practicing law for 33 years. And my firm, as it is right now, has existed for the last 30 years. We have been doing this. We understand we are very good at litigation, and so often we see files that will we'll draw a counterclaim on in some form or context or, an adversary in bankruptcy that will get pulled from our farms and sent to, you know, the quote unquote, silk stocking Wall Farm.

And quite honestly, I mean, I they do a fabulous job. And there's certainly things that I don't want anything to do with from the standpoint, you know, the class action came across my desk. I could not get that moved fast enough, because that's not that's not what we did. But I can tell you that more often than not, most what comes across our desk are the classic things like raw foreclosure or slander of title, these kind of things that we deal with a lot.

And we know the lawyers on the other side of it, we know what their playbook is. And so and by and large, I think a lot of times we get a better result, a faster result, a more affordable result for less attorneys fees. So, but anyway, those were the two topics that we hit a particular interest to me.

Great. Well, I know you're on the legal advisory council, and you've been kind of a staple with the league for some time. Could you talk a little bit about, what have been some of the real high points of your time with the league, some of the accomplishments you're most proud of? Anything you want to crow about?

You know that? I mean, that's a really interesting question. One, I'm not much about patting myself on the back. So when you talk about accomplishments, here's what I can tell you. And this will be sort of repetitive, which is the relationships. Everything to me in life lives about relationships. And so the people that I've met here, the connections that I've made it, it's been fabulous, you know, to the people in the industry, what I can tell you is there are a lot of really brilliant people here.

And every time I come to the summit or any of the other events, I'm always amazed by the level of talent and the intelligence in this world. And so, so that that's really valuable to me. And so I don't I don't know if you call it a compliment, I would say this, that, you know, recently, I guess a year ago, year and a half on the, when I got on to the advisory board and Brooke Sanchez, my, my equity partner in the firm, she started getting more involved and is definitely one of those people.

You hear it all the time. The more you put into an organization, the more you get out of it. So I would strongly encourage other members or other law firms that are not members to become members, get active it it pays dividends and relationships. It pays dividends in client contact and and yeah. So those are can accomplishments.

But that's that's dumb. Yeah. So well obviously you've been to a lot of these this particular event. Have there been any, any real moments that stood out as far as things that surprised you or just, real things you're that go away from this event talking about and telling your your friends and colleagues about. So and this on a, on a very, binary and sort of wire.

But I always at every one of these events, there's always like one pearl of wisdom that I leave with and you know that I will I will be texting my office before I even leave. So some of the issues when we were talking about the semi-state, cases and, you know, most of the states that I'm in are non-judicial states, because of the shumi state case, we're now having to do judicial foreclosures.

And one of the things that that one of the servicers, one of the servicers were talking about was the need to make sure that you're touching the file, you're updating it. We're always up, we're always touching the files, and we're updating them. But from a curtailment standpoint, in non-judicial state, it's really, really simple to know. You got to hit Xyzzy because you have these timelines when you go in a non-judicial state and now you're doing a judicial foreclosure, the timelines go out the window.

Right. And so it was just it was an interesting discussion about file maintenance to make sure on the back end that one of the GSEs is not looking for curtailment because it looks like a file sat for 90 days, right? When in fact, the paralegals were probably calling the sheriff every other day trying to get the people served.

And a lot of my states are rural. So that's like, what big ticket item is trying to get the trying to get people served to be able to move forward. So anyway, that's again, that's one of those other benefits to legal aid. And these events, there's always some pearl of wisdom that makes me change something that I'm doing today.

And it's not the trials aren't being worked. It's that I want to make sure my team is adequately noting what it is that we do. Right. Well, last thing I want to I gave your, your podcast co-host Steve, a chance to to plug this, but I also want to let you take a chance to, to speak about your podcast you've been doing with Steve Vladeck for a while.

The what? The, podcast. What would you tell us about that? I don't we, we've linked to it a couple times. So going back to what's valuable about Legal League, and for me, it's all about relationships. Steve and I were sitting I want to say we're at the Anatole. But anyway, he we're just having a beer, basically.

And he said, hey, would you be interested in co-hosting a podcast with me? And, I'm like, sure, let's let's do it. So that kind of came together over a little period of time. And to me, it is like the absolute most fun. I'm enjoying it. It's amazing to me, the game, the intelligent people. If you've not listened to it, you know, there's several episodes that are out there.

We did a episode on Todd Miller. Fabulous episode talking about his, yeah, him and his wife's rescue, Animal Farm. Suddenly we'll have some stuff that'll be, like, really meaty, economics driving some. Definitely an economics nerd. But then we'll have some human interests episode. So. But anyway, I love it. I mean, I'm having a blast and and but for legally Pig.

But for my connection with Steve, I wouldn't be on. I wouldn't be happy. So. Yeah. Well, fantastic. Well, thank you for taking some time to talk to us. Kent McPhail and McPhail. Sanchez, we appreciate you. And then enjoy the rest of the conference.