I am finally giving in to the requests that I do another workshop. It is a two-day workshop on evidence, burden of proof and what really persuades a judge. Lawyers and laymen have been using our title and securitization reports, expert declarations and consultations. But the results are spotty because of lack of knowledge — how to use the information to gain an advantage and control the narrative in court proceedings. Of course I am going to present some suggestions on pleadings and motions — especially a motion for summary judgment filed by the homeowner (an idea promoted first by Mark Stopa, Esq.). But my main emphasis is going to be the use and presentation of facts and opinions from analysts and experts.
The first thing you need to know about the cases where the use of those forensic reports has been successful is that they can only be introduced as presenting facts. For example the analyst might find that the designated creditor in the foreclosure action is a trust whose beneficiaries have been paid on an on-going basis from the start of the loan to the present, despite the fact that the homeowner has stopped paying. It is a fact if you have the distribution report. It is a fact that the prospectus or pooling and servicing agreement calls for those payments and calls them “Servicer payments”. But it is an opinion and a conclusion of law that there is no default and therefore the action should be dismissed.
The way the facts are presented makes a big difference too. If your analyst (fact witness) states that there is no evidence of any payment due but not received by the creditor, then he can state that as a matter of fact, the notice of default is based upon allegations of missed payments that are in conflict with the distribution reports and he or she can show the judge the two documents. If he shows that the securitization documents provide for the Servicer to make those payments regardless of whether the homeowner is paying or not, that corroborates the infrastructure that protects the creditor from any actual default.
The expert is there to give opinion evidence, which is to say that the expert states his conclusions. But conclusions are worthless unless they are persuasive. And they are not persuasive unless the facts are presented in a manner that leads the average judge to come to his or her own conclusion that there is no default, despite the fact that the homeowner stopped paying. The expert can explain that the mortgage deal is still current and that the Servicer has loaned the money to the borrower in a new transaction. The expert can demonstrate this by showing that the advances are not recoverable from the trust beneficiaries who were paid. Hence the legal conclusion, argued by the lawyer and suggested by the expert is that there is no basis for a foreclosure action because the new liability to the “Servicer” is not secured by the mortgage or any other instrument in which the home is collateral for the debt (if such a debt arises by operation of law).
The above example is by no means a silver bullet. There are many factors to consider when setting up such a defense. If possible it should be one basis for denial that there was a default — without inadvertently admitting that the note and mortgage are valid enforceable instruments. If you come into the case late, you may wish to file a motion to amend the affirmative defenses and answer or a motion for summary judgment.
The primary focus must be on the money trail, which is why you need analysts and experts because the pretender lender is not going to give you this information and in many cases will deny that the loan was “securitized” even when the reverse is true, although hidden behind a private label. Reports and analyses of documentation simply don’t cut it. They might suggest the possibility of illegal conduct, but at the end of the day, few judges are going to dismiss a foreclosure because of documentary defects — especially on the rocket dockets. But when you tell them your client never received the loan from anyone in the securitization cloud, then you stand a better chance in discovery and at trial forcing the foreclosing party to prove their entire case.
My focus at the seminar will be how and when to use analysts, forensic reports and expert testimony (which can include hearsay), the way to establish credibility, the way to present a persuasive case, and the knowledge that every trial lawyer, investigator, analyst and forensic auditor must have before signing an affidavit or giving live testimony.
Details on the seminar will be announced shortly. It will be in South Florida.
Filed under: foreclosure