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If there really was no credibility attached to borrowers’ answers (denials), affirmative defenses and counterclaims, it should be dispelled by the fact that many courts around the country are taking action that looks a lot like the defenses and claims presented on this blog. Take a look at Illinois Rule 113. Practice and Procedure in Mortgage Foreclosure Cases at
The narrative of the rule is simple:
(a) Applicability of the Rule. The requirements of this rule supplement, but do not replace, the requirements set forth in the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq.).
(b) Supporting Documents for Complaints. In addition to the documents listed in section 15-1504 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1504), a copy of the note, as it currently exists, including all indorsements and allonges, shall be attached to the mortgage foreclosure complaint at the time of filing.
(c) Prove-up Affidavits.
(1) Requirement of Prove-up Affidavits. All plaintiffs seeking a judgment of foreclosure, under section 15-1506 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1506), by default or otherwise, shall be required to submit an affidavit in support of the amounts due and owing under the note when they file any motion requesting a judgment of default against a mortgagor or a judgment of foreclosure.
(2) Content of Prove-up Affidavits. All affidavits submitted in support of entry of a judgment of foreclosure, default or otherwise, shall contain, at a minimum, the following information:
(i) The identity of the affiant and an explanation as to whether the affiant is a custodian of records or a person familiar with the business and its mode of operation. If the affiant is a person familiar with the business and its mode of operation, the affidavit shall explain how the affiant is familiar with the business and its mode of operation.
(ii) An identification of the books, records, and/or other documents in addition to the payment history that the affiant reviewed and/or relied upon in drafting the affidavit, specifically including records transferred from any previous lender or servicer. The payment history must be attached to the affidavit in only those cases where the defendant(s) filed an appearance or responsive pleading to the complaint for foreclosure.
(iii) The identification of any computer program or computer software that the entity relies on to record and track mortgage payments. Identification of the computer program or computer software shall also include the source of the information, the method and time of preparation of the record to establish that the computer program produces an accurate payment history, and an explanation as to why the records should be considered “business records” within the meaning of the law.
(3) Additional Evidence. The affidavit shall contain any additional evidence, as may be necessary, in connection with the party’s right to enforce the instrument of indebtedness.
(4) Form of Prove-up Affidavits. The affidavit prepared in support of entry of a judgment of foreclosure, by default or otherwise, shall not have a stand-alone signature page if formatting allows the signature to begin on the last page of the affiant’s statements. The affidavit prepared shall, at a minimum, be in substantially the following form: (see link above)
Editor’s Note: What is striking about this particular rule is that it picks up on both the documentary defects being used in Court and the trail of money which is being presumed in Court. This time, the would-be forecloser must state where the books and records are for all transactions relating to the loan.
At a minimum the complaint and exhibits should contain a clear and concise picture of the history of the loan from start to finish, where the money came from, where it went and who is looking to get paid now. This will strike at the heart of foreclosures in Illinois and should be followed in other states, including those who have already passed remedial legislation and rules regarding these foreclosures that borrowers say are faked and the pretender lenders are saying are real.
In Court the attorneys for the would-be forecloser do not allege nor offer proof right now as to the reality of any transaction upon which they place reliance as support for the foreclosure. By reality I mean whether money exchanged hands. The overwhelming evidence I have seen, combined with the independent studies in San Francisco, Baltimore and other jurisdictions is that “complete strangers to the transaction” are bidding properties at auction as “credit bids” and thus avoiding paying any cash for the purchase of the property.
The lawyers for the pretender lenders have many legal arguments they use, but they all boil down to one thing: “we don’t need to show proof of payment, proof of loss nor the books and records of the injured parties and their witnesses.” If the Judge buys the legal argument under the bias that the borrower must owe the money to someone and the announced creditor in front of them is the only one making the claim, then the borrower loses, the property is sold, and the outcome is that dozens of companies are picking up free houses with “credit bids” where they were never the creditor and never paid a dime for the funding or purchase of the mortgage.
If the Judge feels that procedurally the borrower has a right to know the identity of the creditor who is actually carrying a loan receivable account on its books because they paid for the loan, and if the Judge feels that the borrower has a right to know how the “loss” figure was computed, then discovery ensues and there is usually a settlement if the borrower presses his/her case aggressively.
The other thing the Court addresses but leaves some loopholes, is that all the indicia of transfers of the loan must be attached directly to the complaint. This removes at least some of the maneuvering, fabrication and forgery of documents after the Judge rules that certain papers are necessary and questions counsel for the pretender lender as to why it wasn’t produced before.
I think the Illinois Supreme Court, in passing these rules should be cited as persuasive authority as to the existence of a problem, and the findings of what will reduce or mitigate damage from the problem caused by the free for all amongst participants in the fake securitization chain, who each have their turn at stepping up to the plate to hit a few balls (foreclosures in which they will be awarded a free house).
It still behooves the borrower to have as much information as possible about the securitization of their loan. And even more importantly, it behooves the lawyers for borrowers to study up on objections based upon leading, foundation, competency of witness, hearsay, and business records objections. The tide is turning, albeit at a frustrating slow pace. What will be done for people whose cases have been “completed?” Very little in my opinion. And the damage to millions of families, the economy and the credit markets around the world? We see very little movement to punish those who committed illegal acts and even less movement to even charge them.
Remember this: every investor agreed in small print that his own money could be used to pay the interest and principal he was expecting as a fund manager of a pension fund or whatever. And the scheme crashed as soon as investors stopped buying. Those are the identifying hallmarks of a Ponzi scheme.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: | civil procedure, foreclosures, Illinois, money exchanging hands, PROOF OF CLAIM, proof of loan receivable account, proof of loss, Supreme Court