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Counsel’s Corner: Oversight Brings Elevation to the Default Industry

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Leonard McDonald

Leonard McDonald is a trial attorney for Tiffany & Bosco P.A., based out of Phoenix, Arizona. Having litigated hundreds of trials in the bankruptcy court, eviction court, and superior and district court, McDonald has also handled appeals in the Arizona and Texas State and federal courts, as well as the Bankruptcy Appellate Panel for the 9th Circuit. In addition, he has over 20 years of experience handling complex title litigation. His practice focuses exclusively on representing the rights of secured creditors.

McDonald is the head of the Financial Services bankruptcy department, and in that role has handled the largest volume of Chapter 7, 11 and 13 creditors cases in the District of Arizona for many years. He is an author, speaker, and leading practitioner in the area of enforcing the rights of secured creditors and speaks frequently in Arizona and across the country on issues relating to creditor representation within bankruptcy. McDonald also assists clients with the handling of state and federal forfeiture actions, as well as obtaining court appointed receivers.

McDonald spoke with DS News on the challenges seen post-crisis in the foreclosure landscape and what lies ahead for the future of default servicing.

From a legal or regulatory standpoint, what are some of the biggest changes have you've noticed post-crisis in the foreclosure landscape?

I think the obvious answer is the intense governmental and regulatory oversight that has been implemented. Servicers are now being scrutinized on a level never before imagined and the scrutiny impacts our everyday default servicing legal practice. Each file now is put through layers of compliance audits and reviews. I believe this has truly elevated the industry as a whole. We now have on site audits from our servicer clients on a regular basis and we embrace those audits as an opportunity to meet face to face with our clients and build bridges that will help both the servicer and the firm as we travel through this ever changing regulatory landscape.

Do you see these regulatory changes as a positive or a negative to the process?

Like almost anything in life, you can take positives or negatives from this situation.  Certainly the cost of doing business for both servicers and their law firms has increased dramatically as a result of the added regulatory scrutiny.  While the regulatory oversight can be daunting, it’s not particularly helpful to joust at the regulatory windmill.  The industry as a whole has adapted to these changes remarkably well.  We have embraced this additional oversight as a firm, and it has given us a unique opportunity for self-introspection that is sometimes difficult to do during the daily practice of law.

Do you have any specific experiences that have come out of this where you are glad there are changes?

Following the foreclosure crisis, this firm and firms across the country began to formalize policies and procedures that previously had informally been in place.  The formalizing of these policies has provided an overall benefit for our firm.

Do you see regulations and oversight minimizing in the future of default servicing?

The policies and procedures that have been put in place would appear to be permanent in nature.  Candidly, it’s difficult to see what area of the foreclosure practice that remains open to further policy implementation.  While there may be a slow-down in future regulations, I don’t see the regulatory landscape minimizing.  If in the long run regulatory requirements are minimized, our firm would continue to adhere to all of the policies and procedures currently in place.

About Author: Kendall Baer

Kendall Baer is a Baylor University graduate with a degree in news editorial journalism and a minor in marketing. She is fluent in both English and Italian, and studied abroad in Florence, Italy. Apart from her work as a journalist, she has also managed professional associations such as Association of Corporate Counsel, Commercial Real Estate Women, American Immigration Lawyers Association, and Project Management Institute for Association Management Consultants in Houston, TX. Born and raised in Texas, Kendall now works as the online editor for DS News.
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