How Lenders Can Build a Preferred Panel of Enforcement Counsel for Non-QM Portfolios

Stop wasting time and money on ill-fitted enforcement counsel — build a panel counsel that understands non-QM borrowers, speeds default resolution, and keeps your outsourcing compliant.

Default servicing teams and operations leaders face three recurring pain points: (1) inconsistent results across jurisdictions, (2) hidden compliance and reputational risk from inexperienced outside counsel, and (3) fractured reporting that frustrates collections and portfolio forecasting. In 2026 those risks are amplified by the mainstreaming of non-QM lending, increased regulatory scrutiny, and new remote-court workflows. This guide gives mortgage lenders a practical, operational playbook — including a copy-ready RFP template and a granular scoring rubric — to build and govern a preferred enforcement counsel panel tailored for non-QM portfolios.

Executive summary — what to do first

• Define scope: specify enforcement tasks (foreclosure, receivership, writs, levy, post-judgment collection).
• Profile your borrowers: map non-QM subsegments (self-employed, investors, asset qualifiers, shadow-debt exposure).
• Run an RFP: distribute a focused RFP to law firms and local counsel networks with tech integrations and compliance requirements.
• Score objectively: use a weighted rubric (experience, outcomes, compliance, tech, pricing) to shortlist vendors.
• Onboard and monitor: implement SLAs, KPIs, audits, and a cadence for re-evaluation.

Why 2026 changes the calculus for panel counsel selection

Late 2025 and early 2026 cemented several trends that directly affect enforcement counsel procurement:

• Non-QM goes mainstream: Larger originators are scaling non-QM portfolios, increasing the volume and diversity of enforcement needs across state law regimes.
• Shadow debt matters: BNPL, crypto lines, and off-credit liabilities complicate borrower income and asset profiles; enforcement counsel must be skilled in forensic discovery.
• Remote and hybrid court procedures: E-filing, virtual hearings, and electronic service are now default in many jurisdictions—counsel must demonstrate technological fluency.
• Heightened compliance expectations: Regulators and plaintiffs' bar increased scrutiny of mortgage servicing practices; vendors must show FDCPA/TCPA awareness where applicable, plus state foreclosure compliance.
• Data-driven vendor management: Lenders expect performance dashboards, API integrations, and advanced reporting as standard in legal vendor engagements.

Operational framework — step-by-step

1. Governance & ownership

Assign a cross-functional sponsor (Default Servicing Director + Legal Ops) and create a vendor selection committee that includes compliance, IT, and recoveries. Establish meeting cadences and decision thresholds for rapid escalation (e.g., assignment of high-balance, litigation-sensitive accounts requires C-suite sign-off).

2. Segment your non-QM portfolio

Don’t treat non-QM as one homogeneous block. Segment by:

• Loan size (retail vs. jumbo)
• Borrower type (self-employed, investor, asset/DTI lenders)
• Collateral complexity (single-family, multi-unit, commercial hybrid)
• Likelihood of contested litigation (based on early default indicators)

3. Define roles, scope & fee models

Decide which tasks are in-house vs. outsourced. Typical panel counsel responsibilities include: initial pleadings, motion practice, appearances, foreclosure/eviction, receivership, post-judgment enforcement, and title remedies. Common fee models:

• Hourly with monthly caps
• Flat per-file fees for routine foreclosures/evictions
• Contingency or hybrid for post-judgment collections (rare for mortgages)
• Subscription/retainer for compliance advice and training

4. Tech & integration requirements

Require vendors to support:

• Secure API for case intake and disposition updates
• Standardized CSV/JSON reporting and nightly feeds
• Support for e-filing and CM/ECF or local equivalents
• Document repository and audit trail (immutable logs)

5. Compliance, data protection & training

Include clauses for state foreclosure compliance, FDCPA/TCPA where applicable, GLBA/CCPA or successor privacy laws, data breach notification windows, and mandatory vendor training on non-QM borrower engagement best practices.

RFP template — copy, paste, distribute

Below is a compact, production-ready RFP you can adapt and distribute to prospective enforcement counsel.

RFP: Enforcement Panel Counsel — Non-QM Portfolio (Sample)

Issuer: [Lender Name]

Issue Date: [mm/dd/2026] | Response Due: [mm/dd/2026]

1. Overview

[Lender Name] seeks qualified law firms and local counsel to serve as enforcement counsel for our national non-QM loan portfolio. The panel will be responsible for foreclosure, eviction, post-judgment enforcement, receivership, and limited litigation defense.

2. Scope of Services

• Case acceptance and conflicts checks within 48 hours.
• Initial case filing timelines (state-specific).
• Motion practice, hearings, settlement negotiations, title work, and collections activity up to levy/turnover.
• Monthly reporting, secure document storage, and e-filing capability.

3. Minimum Qualifications

• 5+ years handling residential mortgage foreclosures (non-QM experience preferred).
• Proven success with contested cases and post-judgment enforcement.
• Proof of errors & omissions insurance and cybersecurity measures.

4. Required Submissions

1. Firm profile and key attorney CVs.
2. Representative case studies (outcomes, timelines) for non-QM matters from 2023–2025.
3. Pricing spreadsheet by service type.
4. Sample engagement letter and proposed SLA.
5. References (3 client references with contact info).

5. Evaluation Criteria

See attached scoring rubric. Shortlisted firms will be invited for interviews and a 30-day pilot.

6. Submission Instructions

Submit electronically to [procurement@lender.com] with subject line: RFP — Enforcement Panel Counsel Non-QM.

Scoring rubric — objective, repeatable vendor selection

Use this weighted scoring rubric to quantify proposals. Scores range 1–5 per criterion (1 = unacceptable, 5 = exceptional). Multiply by weight; sum to 100.

1. Non-QM Experience (20 points)
   • 5: 10+ non-QM trials/appeals with documented outcomes (last 36 months)
   • 3: 3–9 non-QM matters
   • 1: Minimal or no non-QM experience
2. Litigation Outcomes & Efficiency (15 points)
   • Measure: time-to-judgment, percent resolved pre-judgment, post-judgment collection rate.
3. Compliance & Risk Management (15 points)
   • Training programs, prior regulatory issues, indemnities, FDCPA/TCPA competence.
4. Operational Capacity & Tech Integration (15 points)
   • API readiness, e-filing experience, case management tools, SLA adherence history.
5. Pricing & Cost Predictability (10 points)
   • Competitive flat-fee options, transparency on additional fees, discounts for volume.
6. Geographic Coverage & Local Counsel Network (10 points)
   • Depth of bench in your priority states and ability to staff high-volume counties.
7. References & Client Feedback (5 points)
8. Cybersecurity & Data Handling (5 points)
   • ISO/ SOC attestations, encryption practices, breach response time.
9. Value-Add Services (5 points)
   • Forensics for shadow debt, settlement facilitation, training, analytics support.

Scoring example: Firm A achieves weighted total 83/100. Lender sets threshold 75 to invite to pilot. Firms scoring 60–75 may be conditionally accepted for niche jurisdictions. Firms under 60 are rejected.

Red flags and deal-breakers

• No documented non-QM matter experience where required.
• History of sanctions, malpractice settlements, or regulatory findings within 5 years without remediation plans.
• Refusal to accept standard data-security terms or audit rights.
• Opaque pricing or excessive pass-through fees.

Onboarding & pilot — the 90-day playbook

Run a time-boxed pilot before full panel appointments. A typical 90-day onboarding looks like:

1. Week 1–2: Contract negotiation, SLAs, tech onboarding, sample data feed tests.
2. Week 3–6: Pilot case assignments (20–50 files) across 2–3 jurisdictions; daily intake validation.
3. Week 7–10: Performance review — time-to-file, accuracy of pleadings, reporting cadence, client feedback.
4. Week 11–12: Adjustments to workflows and final acceptance or termination.

KPIs, dashboards & ongoing governance

Track these KPIs monthly and surface them in an executive dashboard:

• Time-to-file: days from assignment to initial filing
• Resolution channel mix: percent resolved pre-judgment vs. judged vs. settled
• Days to judgment and levy: speed of enforcement
• Collection rate: dollars recovered / dollars pursued
• Cost per file: legal fees + pass-through expenses
• Compliance incidents: notices, consumer complaints, regulatory findings

Advanced strategies for competitive advantage (2026+)

Use data and operational design to drive lower cost and better outcomes:

• Predictive counsel assignment: Use historical performance data to assign matters to the counsel most likely to produce a fast, lawful resolution.
• Tiered panels: Create A/B/C tiers — A for contested, high-balance matters; B for routine foreclosures; C for localized evictions.
• Dynamic volume-based pricing: Negotiate discounts tied to banded file volumes and quality targets.
• Legal-tech partnerships: Contract for AI-assisted document generation and QC to reduce drafting errors and accelerate filing.
• Continuous training: Require annual refresher training on emerging non-QM borrower issues and shifting state laws.

Case study — hypothetical 2025 pilot (why this works)

Mid-sized lender X ran a 60-day pilot in late 2025 using the rubric above. After assigning 45 files across three states, they reduced average time-to-file from 18 days to 6 days, achieved a 22% increase in pre-judgment resolutions via early settlement, and cut average legal spend per file by 16% in Q4. Critical success factors: clear SLAs, API-based intake, and a small, specialized A-tier of counsel for contested non-QM matters.

Practical templates & copy-ready contract clauses

Here are short clause templates to include in engagements:

• Data Security: "Counsel shall implement commercially reasonable administrative, physical, and technical safeguards as described in Exhibit A and notify Lender of a breach within 48 hours."
• Audit & Right-to-Inspect: "Lender may audit counsel’s files and systems upon 10 business days’ notice, not more than twice annually, to verify compliance with SLAs and data practices."
• Performance Credits: "Failure to meet SLA of [time-to-file ≤ 7 days] for 3 consecutive months will trigger fee credits equal to 10% of monthly invoices for affected matters."
• Indemnity: "Counsel will indemnify Lender for losses arising from counsel’s gross negligence, willful misconduct, or material breach of law."

Common implementation pitfalls — and how to avoid them

• Relying on price alone: Cheaper firms often shift work to unvetted subcontractors; insist on transparency and names of local counsel.
• Skipping a pilot: Full rollouts hide onboarding gaps; run time-boxed pilots with measurable KPIs.
• Missing integration testing: Confirm API feeds and test with live files to avoid intake failures.
• No escalation protocol: Define rapid-response paths for large-balance or reputational matters.

Actionable takeaways

• Segment your non-QM book and align counsel specialization to borrower subtypes.
• Use the RFP and scoring rubric above to ensure objective selection and predictable pricing.
• Run small pilots with live files and require tech integrations before scale deployment.
• Govern with KPIs, audit rights, and SLA-backed performance credits to mitigate outsourcing risk.
• Update panels annually — re-run RFPs on a 24-month cadence or sooner for material portfolio shifts.

Closing — why now

As non-QM lending expands in 2026, operational excellence in enforcement is a competitive differentiator. Lenders who treat panel construction as a strategic, data-driven function — not an ad-hoc procurement task — will realize faster resolutions, lower legal spend, and far fewer compliance headaches.

“A well-designed panel counsel program is insurance — not just for collections, but for regulatory and reputational risk.”

Next step: ready-to-use templates and a live consultation

If you want a copy of the editable RFP, the Excel-ready scoring rubric, and a 90-day pilot playbook customized to your non-QM mix, contact our team. We help default servicing and legal ops teams implement these steps, integrate vendor feeds, and run pilots that deliver measurable results.

Call-to-action: Download the RFP & scoring rubric or schedule a short consultation to map a pilot for your portfolio. Email procurement@judgments.pro with subject line: "Panel Counsel Pilot — Non-QM" or visit judgments.pro/vendor-solutions to get started.

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