Lawyers in Nonjudicial States Should File Constitutional Challenge

I have been receiving increasingly urgent and frustrated messages from lawyers in nonjudicial cases. They are dismayed that the most basic components of proof are not required from “new” trustees on deeds of trust and “new” beneficiaries on the deed of trust, all self proclaimed and presumed valid even if the borrower denies it. Here is my answer:

I think what is missing is a plan for presentation. AND a decision about whether to go to Federal or State Court, or the California Supreme Court or even directly to the 9th Circuit if that is possible. Your case is really against the whole state of California (or whichever state the property is located) for violation of equal protection — debtors whose loans were mortgaged are treated differently from other debtors potentially including the debtors whose cars were mortgaged. Debtors who are subject to non judicial process are not given the same rights and procedures for debtors who are sued in judicial foreclosures. The normal process is if you want to allege a debt that requires a judicial judgment to enforce it, you are required to sue. That is why the decisions in and out of nonjudicial states say that due process requirements must be strictly construed. But in contested nonjudicial foreclosures, it is so loosely construed that complete strangers to the loan transaction can win the house. (See San Francisco study, Baltimore study etc.).
The argument that it is an agreement is cute but not right. Yes it is an agreement and anyone can contract with terms they agree to. But the exception is whether the contract violates law or public policy. Any agreement that violates public policy or to violate state or federal law is void. All Deeds of trust are arguably unconstitutional. But what will fly is a challenge to the nonjudicial scheme as to those cases where the borrower has made the proceeding a contested proceeding by denial of the essential elements of the nonjudicial procedure.

The “agreement” exists ONLY because of a statutory scheme that allows it and the only reason that statutory scheme exists is because of the original presumption behind such a scheme. If the foreclosure is truly uncontested, then it is hard to argue that the due process rights of the homeowner have been diminished. Thus repossession or forced sale at “auction” (another issue to be considered) might be the most expeditious way of handling it without clogging the courts.

But if the homeowner contests all aspects (including that he is a debtor and that the beneficiary is in fact the creditor) — the substitution of trustee, the naming of the beneficiary, the notice of default, the notice of sale etc. THEN the question becomes whether the “contract” (deed of trust) is valid and in particular whether the statutes allowing non judicial foreclosure are being APPLIED in an unconstitutional manner.

A non-creditor stranger who wins this procedure is allowed to place a “credit bid” at “auction” (which are really not conducted as public auctions) gets title to the property spending only the money required to pay for costs of filing.

Specifically, under normal circumstances, if the Trustee on the deed of trust was to receive a notice from the borrower that everything he has received from the wrong beneficiary has incorrect information and that the loan is not in default — the Trustee would ordinarily be required to file an interpleader action. The interpleader would say that he has a duty to both parties and there is a contested matter. The trustee asks for fees and costs because they have no vested interest in the outcome. Then the parties file pleadings about why they should get their way. But this doesn’t happen in practice. And the truth is, if the borrower is right, the substitution of trustee is invalid and the old trustee is still the trustee on the deed of trust. With that on record, how can anyone actually get clear title?

The problem in non-judicial states is that in practice (and in particular in the context of a contested loan which is subject to claims of successors or securitization) the self-declared beneficiary is not required to file substantive pleadings asking for specific relief. This would require the “beneficiary” to state that they are a beneficiary and to plead facts in support of that, attaching various exhibits, and that the loan is in default, and then they would be required to prove it. This would give them a prima facie case to prove. And the borrower would be required to answer the complaint of the beneficiary, file affirmative defenses and counterclaims. That is the very essence of due process in civil action and it should be strictly construed in foreclosures which consists of a forfeiture of the homestead — the virtual equivalent of the death penalty in civil litigation.

But in practice, the State of California doesn’t do any of that. In fact, they do the reverse. If a homeowner wishes to contest the substitution of trustee et al, the homeowner must file a complaint for TRO. And because they are the complainant, they are treated as having the burden of pleading and proof. This statutory scheme was conceived before multiple claims of successors and securitization were known. In practice it needs to be corrected by the courts until the legislature closes the loopholes that make the nonjudicial procedure unconstitutional in practice in certain types of cases.

This flips the rules of civil procedure and evidence on its head. In practice borrowers are not only required to plead that they deny the substitution of trustee et al was valid but to prove it — thus reversing the procedure that would be required in a judicial foreclosure, which is a second equal protection argument. Why are borrowers with other secured collateral (autos, e.g.) treated differently from borrowers with homes as collateral? Why are mortgagors treated differently in proceedings arising from non judicial process than in judicial process?

So the current practice requires the borrower to deny allegations that have not been filed and then prove that their denial is valid. That makes no sense and is an obvious denial of due process. The way the process works in practice is a stranger to any transaction with the borrower says “You owe me money” and then the borrower has the burden of saying “No I don’t” and then the defendant has the burden of pleading and proving that he doesn’t owe the money when he doesn’t know what the stranger is talking about. The only way the borrower can prevail on meritorious claims and defenses is by proving a negative. This is the opposite of due process.

This is why I have said since early 2008, that an action needs to be brought directly to the California Supreme Court or in Federal court or perhaps a special action to the 9th Circuit in which the application of the non judicial statutory scheme is challenged for those cases where the borrower denies the rights of substitution of trustee, denies the status of the self appointed new beneficiary and denies the default, denies the loan, etc. If the question is put to the court I feel confident that the decision will be in favor of borrowers. But any attempt to declare the non judicial scheme unconstitutional as a whole will fail.

Love South Florida: Car Stolen, Show Canceled

I woke up this morning to find an empty parking place where my car had been. In the back of the car I had just put about two dozen case files, most of which, fortunately, I have in electronic form. But the result was that I spent the day with the police, the insurance company and the car rental agency. I will say that State Farm seems to be doing what they should be doing, but I am stuck with the prospect of buying another car over the next week or so, and of course re-constituting the files that were stolen along with the car. No, I don’t think the banks did it. I think car thieves did it and that the car is either chopped into pieces now or on its way to South America. The files were most probably shredded or burned.

If by some weird chance you see a tan Lexus 400h SUV with a Florida plate 983 NGU, kindly call the police.

Since I have had zero time to prepare for the show after an exhausting day I am giving myself another night off. For those of you trying to reach me I have all day meetings scheduled for Friday and Saturday. Monday I am going to a deposition and then a hearing. So the first day I will have to breathe is Tuesday, when I will start redoing the paper files that were lost and preparing responses and notices in cases in which I am the principal attorney.

Thank you for your continuing support.

Tampa Trial Judge Rules for Borrower Where Correct Objections Were Made

Patrick Giunta, Esq. brought this case to my attention.

Here is a case between the famed Florida Default Law Group, who reached distinction amidst accusations of fabricated documents, and an ordinary borrower represented by a St. Peterburg trial lawyer, John R. Cappa, who apparently knows the timing and content of the right objections. The result was involuntary dismissal against the foreclosing party.

The basis of the ruling was that the default had never been proven, the Plaintiff never offered proof of “rights to enforce” and tangentially the business records were not qualified as an exception to the hearsay rule. The witness admitted he knew nothing about the payment history of the borrower and was relying on the reports in front of him — something that is hearsay on hearsay. If anything corroborates my insistence on denying everything that is deniable, this case does exactly that. If the borrower admitted the default, admitted the note, admitted the mortgage, all that would be off bounds at trial because they would be facts NOT in issue.

In this case, like so many others the Plaintiff offered the letter giving notice of default BEFORE the FOUNDATION was established that there was in fact a default. I might add that non-payment is not a default if the actual creditor received payments anyway (servicer advances etc.), which is why I make a big deal about identifying the party who is the creditor — the person or entity that is actually owed the money. So the objections are relevance, foundation and hearsay.

Note that the Plaintiff failed to introduce proof of the right to enforce, even if they had THE note or any note. This has been the subject of numerous articles on this website. Being a holder means you can file suit, but without proving you are a holder with rights to enforce, you lose. And the way to prove that you have the rights to enforce is to provide some sort of written instrument that specifically says you have the right to enforce. It is the only logical ruling. Otherwise anyone could steal a note and enforce it without ever committing perjury.

While there are other objections that I think could have been raised, Cappa was confident enough in his position that he narrowed his attack onto issues that the Judge was required to follow. The Judge was confident that an appellate court would affirm his decision.

Take a look at the transcript and see if you don’t agree that there is something to be learned here. Forcing the Plaintiff to actually prove their case frequently results in judgment for the borrower. The reason is simple where you have originators who admit they actually did the loan on behalf of others and there are questions as to who was the servicer and when. Most importantly, there is a quote here in which Cappa says “just because they sent a default letter doesn’t mean that a default occurred” He’s right. It only means they sent the letter. The truth of the matter asserted (default) is hearsay. And being “familiar with a report allegedly gleaned from business records doesn’t mean you can testify that the payments were processed properly nor that you have any personal knowledge of the record keeping procedures that were used — even with 20+ years experience in the business.

Trial PHH Mortgage v. Parish

 

It Was the Banks That Falsified Loan Documents

I know it doesn’t make sense. Why would a lender falsify documents in order to make a loan? I had a case in which a major regional bank had their loan representatives falsify loan documents by having the borrower certify that there were houses on his two vacant lots. The bank swore up and down that they were never involved in securitization.

When the client refused to make such a false statement — the bank did the loan anyway AS THOUGH THE NONEXISTENT HOMES WERE ON THE VACANT LOTS. Thus they loaned money out on a loan that was guaranteed to lose money unless the borrower simply paid up despite the obvious loss. The borrower’s error was in doing business with what were obviously unsavory characters. True enough. But he was dealing with the regional bank in his area that had the finest reputation in banking.

He figured they knew what they were doing. And he was right, they did know what they were doing. What he didn’t know is that they were doing it to him! And they were doing it to him in furtherance of a larger fraudulent scheme in which investors were systematically defrauded.

When I took the client’s history all I had to hear was this little vignette and I knew (a) the bank was involved in securitization and (b) this loan was securitized BEFORE the closing and even before any application for loan was solicited or accepted by the bank. The client balked at first, not believing that a bank would openly declare its non-involvement with Wall Street when the truth would so easily be known.

But the truth is not easily known — especially when the bank is involved in “private label” trusts in which there are no filing with the SEC or other agencies.

The real question is why would the bank ask the borrower to certify the existence of two homes that were never built? Why would they want to increase their risk by giving a loan on vacant land that supposedly had improvements? Or to put it bluntly, Why would a bank try to cheat itself?

The answer is that no bank, no lender, no investor would ever try to cheat themselves. The whole purpose of our marketplace is to allow market conditions to correct inefficiencies and moral hazards. So if the bank was cheating or lying, the only rational conclusion is not that they were lying to themselves, but rather lying to someone else. They were increasing the risk of non repayment and decreasing the probability that the loan would ever succeed, while maximizing the potential for economic loss to the lender. Why would anyone do that?

The answer is simple. These were not “overly exuberant” loans, misjudgments or “risky” behavior situations. The ONLY reason or bank or any lender or investor would engage in such behavior is that it was in their self interest to do it. And the only way it could be in their self interest to do it is that they were (a) not lending the money and (b) had no risk of of loss on any of these loans. There is no other conclusion that makes any sense. The bank was being paid to crank out loans that looked valid and viable on their face, but in fact the loans were neither valid nor viable.

Why would anyone pay a bank or other “originator” to pump out bad loans? The answer is simple again. They would pay the originator because they were being paid to solicit originators who would do this and then aggregate over-priced, non-viable loans into bundles where the top layer contained apparently good loans on credit-worthy individuals. And who would pay these aggregators? The CDO manager for the broker dealers that sold toxic waste mortgage bonds to unwitting investors. As for the risk of loss they created an empty unfunded trust entity upon whom they would dump defaulted loans after the 90 day cutoff period and contrary to the terms of the trust.

So it would LOOK LIKE there was a real lending entity that had approved, directly or indirectly, of the the “underwriting” of a loan. But there was no underwriting because there was no need for underwriting because the originators and aggregators never had a risk of loss and neither was the CDO manager of the broker dealer exposed to any risk, nor the broker dealer itself that did the underwriting and selling of the mortgage bonds.

Reynaldo Reyes states that “it is all very counter-intuitive.” That is code for “it was all a lie.” But we keep treating the securitization infrastructure as real. In the 2011 article (see below) in Huffpost, the Federal Reserve cited Wells Fargo for such behavior — and then the Federal Reserve started buying the toxic waste mortgage bonds at the rate of some $60 billion PER MONTH, which is to say that approximately $3 Trillion of toxic waste mortgage bonds have been purchased by the Federal Reserve from the Banks. The Banks settled with investors, insurers, guarantors, loss sharing agencies, and hedge counterparties for pennies on the dollar, but so far those settlements total nearly $1 Trillion, which is a lot of pennies.

Meanwhile in court, lawyers are neither receiving nor delivering the correct message in court. They seek a magic bullet that will end the litigation in their favor which immediately puts them in a classification of lawyers who lose foreclosure defense cases. The bottom line: the lawyers who win understand at least most of what is written in this article, have drawn their own conclusions, and are merciless during discovery and/or at trial. Then the opposition files a notice of voluntary dismissal or judgment is entered for the homeowner “borrower.” Right now, these losses are acceptable to banks who are still playing with other people’s money. If lawyers did their homeowner and litigated these cases aggressively, the bank’s illusion of securitization would end. And THAT means most foreclosures would end or never be started.

Wells Fargo Illegally Pushed Borrowers into SubPrime Mortgages

7 Years of Begging and Finally They See the Light

Back in 2007-2008 I told the State of Arizona and other states that inquired, that they were owed a lot of money because of the failure to abide by state law regarding the recording of instruments. Taxes, fees, costs and expenses were never collected because of MERS and lesser known similar systems (See Chase Bank), resulting in billions of dollars in lost revenue while the same offices got inundated with low cost (Lis Pendens) filings when the mortgage loans turned up in foreclosure courts. And that was just in the State of Arizona. Think about 50 States. The counties and states were hit with an avalanche, 6 million so far, of foreclosures and had to hire more staff, more  judges and adopt questionable “rocket dockets” and incorrect interpretations of non-judicial statutory schemes.

The result, according to some studies was that the states lost money, the banks made money through dubious foreclosures, and the investors who were the source of nearly all the money loaned on residential homes ended up suing or begging for settlements. Government was crushed under debts and expenses that could not be paid. Arizona Finance admitted that the total was about $3 Billion which was almost exactly the same as the State deficit. After months of wrangling my plan was adopted by the leaders of the State Senate and House of Representatives, and the governor’s office. Then suddenly it went dark and various orchestrations of “Neil Garfield doesn’t know what he is talking about” were played around the country, with the Banks footing the bill.

Now a Judge in Pennsylvania has stated the obvious (see below) and Pennsylvania will be the first state to recoup billions of dollars in lost revenue and expenses, fines, interest and other charges — without spending a dime on lawyers, who are all proceeding on a contingency fee basis. Those lawyers are going to make a king’s ransom in fees.

Now a Federal Judge has seen the light and expressed himself quite clearly. The whole point of the public records system is to provide confidence in the system of title and giving buyers or lenders the comfort of knowing that they had what they thought they were getting. The whole purpose of MERS and similar schemes was to avoid the public records system — until it comes time to use them to foreclose on previously unrecorded transactions involving the mortgage. Judges around the country have expressed fear that our entire title system has been compromised — both publicly in Bar seminars and privately to me in interviews.

All this happened because the decision was made to force borrowers to shoulder the entire burden of the mortgage meltdown. This country has a habit of relying on a “free marketplace” where it is OK to promote debt and borrowing, including a hard sell and then blame people when they believe the commercials and sales script. We blame them for being in debt! In so doing we got people to rely on easy credit in lieu of a living wage. We did the same thing with tobacco products where nobody cool would be caught dead (every pun intended) without a cigarette hanging from their mouth. But when they get cancer or COPD we blame the smoker. And not to get too political, we did the same thing with immigration. The “free marketplace” did everything they could with local, state and federal government to bring in 11 million people who would provide cheap labor, pay taxes and buy goods and services. Nobody cared whether they had papers and Reagan even granted them amnesty. Now we blame them all for being here.

The systemic problem is that we fail to match accountability with capability. Just because you can get a pension fund manager to part with $100 million doesn’t mean you are entitled to keep it. Just because you get a borrower to sign some papers that make no sense whatsoever, doesn’t mean the papers ought to be enforced — especially when it is at the expense of the pension fund. We have the intermediaries driving the train instead of the real parties in interest. The Banks are seen as too big to fail while the horrendous loss of confidence and net worth in most households (some of which are now under a bridge) is something we just need to suck up and get over. Our system was created to allow for plenty of room for chaos and even a bit of insanity. But when you have the inmates (Banks) running the asylum, then the benefits flow out of the system instead of flowing to those who are part of the society that is governed by our system of government.

http://www.timesherald.com/general-news/20140703/federal-judge-finds-mortgage-registry-company-violated-pa-statute-in-montgomery-county-lawsuit

Quiet Title and Statute of Limitations

In the search for a magic bullet, many pro se litigants and even attorneys have ended up perplexed by laws and rules regarding an action to Quiet Title (frequently misspelled by pro se litigants as “Quite Title”). The purpose of this article is to add some context to the discussion and some reasons for my conclusion — that as more decisions emerge the action for Quiet Title will fade unless the mortgage of record is first nullified or canceled.

For context, let’s remember that the purpose of recording documents in the Public Records is to give certainty and notice to the world of transactions that can be recorded. If courts were to issue decisions to quiet title on recorded documents that are facially valid, the result would be chaos — nobody would know if they were really getting permanent title and title insurance companies would, for obvious business reasons, refuse to issue a title commitment or policy unless EVERYONE brought a quiet title action after every transaction and received a court order, suitable for recording that stated the rights of the stakeholders. This is precisely what the recording statutes are meant to avoid.

Now to the issue of the statute of limitations. Some states hold that even if there is an act of acceleration, the statute of limitations only applies to the monthly payments that were due during the statutory period that are now time-barred. Florida does not appear to be one of those states, and despite some decisions to the contrary, it doesn’t look to me like Florida will become one of them. In Florida it is generally accepted that the statute of limitations time bars any action after 5 years to collect a debt. You should check your state statutes because each state is different and don’t make any decisions without consulting a qualified attorney licensed in the jurisdiction in which your property is located.

So the thinking has gone in the direction of merely stating that the claim is time-barred if there was an acceleration of the debt, and five years as passed. But the Romero v SunTrust decision (see below) from last year, raises the real issues. While the Bank had no right to bring a claim on the note, and presumably had no right to bring an action on the mortgage, the mortgage remains on record. Alleging that the statute of limitations bars any action on the note or mortgage does not invalidate the mortgage. If it is facially valid and properly recorded, it is there in the County records for all to see.

So the question arises “What happens at a subsequent closing on the sale of the property or refinance, and the Mortgagee (or party claiming to be the successor of the mortgagee) refuses to execute a satisfaction of mortgage without receiving payment?” Is THAT a claim that is time-barred? The answer is I don’t know, but I suspect that the refusal to execute a satisfaction of mortgage is an act that is separate from bringing an action to collect on a time-barred debt.

I suspect that an action for equitable relief demanding a Court order to force the Bank into executing a satisfaction of mortgage would fail. That is essentially the same as asking the Court to issue a quiet title order stating that the mortgage is invalid — a precedent that raises numerous hazards in the marketplace. Essentially you are saying that you did have the debt, the bank is time barred from enforcing it, so you want the mortgage nullified or canceled. Several Courts have issued ruling consistent with this ruling so I don’t want to give the impression that what I am saying is the general rule — what I am saying is that I think my theory of the action will become the general rule.

My theory, supported by case law in other states, is that you must have grounds to attack the validity of the instrument and win your case before you can then ask for a decision on Quiet Title. Fortunately, in the context of loans and title subject to claims of securitization, such an attack is eminently possible and likely to succeed on an increasing basis. But in order to do so, one must be very conversant in the claims of securitization generally and especially knowledgeable as to claims of succession or securitization in your specific case. Alleging that this particular defendant has been repeatedly found in court to lack the indicia of ownership or authority to enforce a note and mortgage may not do you any good. You are still left with the question of what to do with a facially valid mortgage encumbrance recorded against the property. If the person you sued doesn’t own it, who does?

After years of avoiding the right strategies, lawyers are coming around to the idea that in order to be truly successful in an action to remove the mortgage encumbrance, you need to have an allege facts to support the claim that the mortgage deed (or Deed of Trust) was invalid in the first instance or that it could not be enforced even if the statute of limitations was not applicable. THEN alleging the statute of limitations is a good idea as corroboration for your logic that the mortgage is invalid because it is unenforceable and without merit in all instances.

There are two such attacks that are promising:

1. Attack the initial closing as lacking consideration or giving rise to common law or statutory rescission. If statutory rescission applies, the law states that the encumbrance is terminated by operation of law. (TILA). The allegation that the opposing bank is a “holder” (according to them) is insufficient to bar your attack on the initial closing. The problem of course is that the banks regularly confuse judges into applying the rules of a holder in due course when the Bank itself makes no such assertion. Hence, being able to remind or educate the judge on the differences between holders, holders with rights to enforce and holder in due course is essential and must be presented with clarity. If you don’t understand the differences you are not prepared for the hearing.

2. Attack the subsequent acquisition of the “loan”, debt, note and/or mortgage also as being a sham lacking in consideration AND of course in violation of the PSA. The point to remember here is that the “assignment” or “endorsement” (almost always fabricated, forged or unauthorized) is only an OFFER in which case the Trustee of the REMIC trust must accept the offer and then pay for it. In fact most PSA’s require a letter of opinion from counsel for the Trust indicating that no negative tax impact will result on the Trust’s REMIC status. Three things we know to be true in most cases: (a) the Trustee never accepted the transfer and (b) The trust never paid for the loan and (c) a loan already declared in default is not susceptible to acceptance by the trust. Keep in mind that most trusts are governed by New York Law which says that such transactions are void, not voidable.

So let us assume that you have a receptive Judge who agrees that the transfer to the trust never occurred or even that the original loan documents lack consideration from the named Payee on the note (and of course the named Mortgagee/beneficiary under the Mortgage). In my opinion you are still only half way to home base. No home run yet, although I think the law will evolve where that IS sufficient to remove the mortgage encumbrance.

So now what? You have still sued parties whom you have proven have no interest in the mortgage. The question is whether you have eliminated the possibility of ANY party (who has no notice of the action) having an interest in the debt, note or mortgage. And many judges will reply that you have put on a pretty good case but you still have not identified the creditor — an odd twist on the defensive actions in foreclosure cases.

My opinion is that you need to allege a fact pattern, where appropriate, that states that Wall Street investors advanced the money to the borrower without knowing that their money was not going through the trust. Hence a direct relationship arose by operation of law between the borrower, as debtor and the investors as creditors. Those investors are creditors not as Trust beneficiaries but rather personally, because the money never went through the trust. The allegation is that they were cheated by intervening fraudulent behavior or negligent behavior on the part of the broker dealer who sold them the securities of an empty REMIC Trust that never received the proceeds of sale of the REMIC RMBS.

At this point you can properly argue that  the investors were entitled to a note and mortgage by virtue of the securitization documents that were used to fraudulently induce them to part with their money. The allegation should be that they didn’t get it and that putting the name of sham “nominees” did not accrue to the benefit of the investors but rather inured to the benefit of intermediaries who were not lending money in your transaction.

Either way, you say that as to the debt between the mortgagor homeowner and whoever else might be making a claim, the initial mortgage encumbrance is now and/or has always been invalid and unenforceable because they recite facts based upon a non-existent transaction, that the mortgage has been split from the note, that the note has been split from the debt, and through no fault of the homeowner, there is no note or mortgage inuring to the benefit of the actual creditors. The cherry on top is that there is no such thing as an equitable mortgage — for the same reasons that courts are reluctant to grant quiet title actions — it would cause chaos in the market place and raise uncertainty that the recording statutes are intended to avoid.

See Romero v SunTrust Statute of Limitations 9-3-2013

See also “a new and different breach” Singleton v Greymar Fla S Ct 882 So2d 1004 9-15-2004

And on collateral estoppel Kaan v Wells fargo Bank NA Case 13-80828-CIV 11-5-13

For further information, call 954-495-9867 or 520-405-1688.

Are you a candidate for Florida’s Hardest Hit Fund relief for Foreclosure Victims? See Florida Hardest Hit Fund

 

 

Moving to Strike The “Witness” and Their “Business Records”

The general practice of the servicers and trustees is to disclose a list of as many as 35 possible witnesses so that the Defendant homeowner cannot possibly perform due diligence investigation, deposition etc. The Judges got wise to this and agreed that disclosing 35 witnesses, 34 of whom you do not intend to call, is the same as no disclosure at all. So now the banks are filing a disclosure of one witness a couple of days before trial. In my opinion the attorney should move to strike the disclosure both as late (ordinarily the trial order requires such disclosure at least 45 days before trial), and as admission that they were playing games when they previously disclosed 35 witnesses. Attorneys vary on how to attack this through motions to strike, motions in limine, motions for continuance and even filing a motion for summary judgment on the eave of trial.
The filing of a disclosure that they only intend to use one witness (who may or may not have been listed on the original list of 35)  is also an admission that their previous witness list disclosing 30+ witnesses was the equivalent of no disclosure at all. It also gives no information on who, where, what she is or does. or how to contact her. It does not even name her employer or capacity. Is she a corporate representative? It doesn’t say so. If she is just a fact witness and not put forward as corporate representative then they have no foundation for introduction of business records as exception to the hearsay rule.
Tracking one case in which the usual shell game of Plaintiffs and servicers has taken place, the witness that was suddenly disclosed 2 days before trial appears to be an employee of SPS, which ordinarily replaces Chase as servicer.

In one case, she is not a records custodian for US Bank, SPS, Chase or the investors. So she must explain in detail how she knows that the records they seek to introduce are “normal business records, kept in the ordinary course of business made at or near the time of each event.” How does she know that and more importantly how COULD she know that as to US Bank, the Trust, the trust beneficiaries who are the creditors (according to them), SPS and Chase who was previously the servicer.

The bullet point here is that the “records” she will seek to introduce are not a printout of the records at all. They are a REPORT in which data populates the report. She doesn’t know where the raw data is. The report was produced by the witness by simply pushing buttons on her computer. She didn’t have access tot he raw data, and she certainly did not have access to ALL of the records because she won’t have the the cancelled checks, wire transfers, or ANY information on distributions to creditors, without which she cannot testify as to the status of the account with the creditors (investors or trust) because the servicer only deals with the borrower.

ATTORNEYS NEED THE LATEST STATE AND FEDERAL LAW ON BUSINESS RECORDS EXCEPTION TO HEARSAY. THE RECORDS ARE HEARSAY AND THE REPORT PREPARED FOR TRIAL IS EXCLUDED BECAUSE IT IS INHERENTLY SELF SERVING AND NOT CREDIBLE. THE REPORT IS HEARSAY (REPORTING) ON HEARSAY (THE BUSINESS RECORDS). The Court is allowed to admit the documents as an exception to the hearsay rule ONLY if the business records exception is proffered and proven, with the burden entirely on the proponent of such evidence.

She can testify — maybe — as to the dealings between SPS and the borrower but not the receipts by the creditor from remittances or distributions by the servicer to the creditors (she has no access to that information), and certainly not the amounts received by the creditors in settlements, insurance, servicer advances, credit default swaps, and government assistance that was received by or on behalf of the creditor and that cured any “default” as described by the Trust instrument (PSA) . Therefore her testimony is incomplete even if accepted. She might testify as to the dealings with the borrower, but she cannot testify as to the receipt of servicer advances and other payments which is the REAL reason for the foreclosure.

It is becoming increasingly clear that these foreclosures are strictly for the benefit of the intermediaries and not the creditor investors. They are attempting to ride the coattails of the creditors so that their claim for refunds and cutoff of liability for refunds to third parties, can be cutoff. None of those things have anything to do with the investors who have been paid by servicer payments advanced regardless of whether the borrower was paying or not.

They want to say the trust or trust beneficiaries are the creditors and that therefore the foreclosure should proceed, but the truth is the creditors are not showing any default, have been paid, sometimes in full. The intermediaries are cloaking their independent claims against the borrower (independent from the mortgage debt) as though they are claims of the creditors, which they are not.

If the creditors are not here to say they are suffering a default as a result of non payment by the borrower there is no reason for the court to assume that such a default exists. That is part of the prima facie case of the party claiming the right to foreclose, despite the absence of a default recorded by the creditor. Having some new servicer come in with a professional witness who really knows nothing about how and where records are kept and can offer no personal knowledge of how and where those records are kept and who does that fails to offer personal perceptions and memory of those perceptions required for a competent witness in any case.

Thus the hearsay REPORTS prepared for trial fail for two reasons, — they are hearsay and they were prepared especially for trial. And they are excluded under the hearsay rule for another reason — the reports on hearsay reports on the raw data which is also hearsay unless that the raw data is shown and described as records that qualify under the business records exception.

For more information please call 954-495-9867 or 520 405-1688.

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