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Discovery can be grouped into three categories: oral discovery (depositions), written discovery (interrogatories and requests for admission), and visual inspection (requests for production). These are collectively referred to as “discovery requests.” As a handy rule of thumb, you can think of discovery requests as requests to either discuss something (depositions), answer something (interrogatories), admit or deny something (requests for admission), or produce something (requests for production). You will be on both sides of discovery—you get to send discovery requests to the other party or parties, and you will receive them from the other parties. The tips and thoughts below are from the perspective of a party receiving discovery requests.
For most lawyers, discovery is simple — ask a bunch of questions or demand a visual inspection. The problems start after that. And what the banks have been counting on with considerable success is that the lawyer won’t do the REST of the work. The Banks and Servicers are going to object all your demands or nearly all of them. What then?
A Motion to Compel or a notice of hearing on the objections should be filed as early as possible. Very often the Motion to Compel is denied or the objections are sustained — most often because the attorney for the homeowner did not make the case for why he needs this information from the opposing side. The usual reason why the order is against the homeowner is the question of relevance and then you have confusion over (1) the requirements of pleading (2) the scope of discovery that is allowed and (3) proof required at trial. If you want to leave your footprint in the courtroom on this you should have a memo and cases that support your position. Discovery is usually liberally allowed. But in foreclosure cases, many judges are improperly limiting discovery because they think they know everything that is going to happen anyway.
As to the requirements of pleading — the court frequently conflates pleading requirements with proof requirements at trial. basically they treat anything the banks and servicers are pleading as already established, so there is no reason to expand discovery beyond what is already assumed. It is circular reasoning but it is prevalent. The fact that a complaint was filed in a judicial state or a notice of default was filed in a non-judicial state does NOT mean that the case is over. The fact that they can survive preliminary motions also does not mean the case is over. All that has happened is that they have fulfilled the bare essentials of pleading and procedure. They must still prove their case. So if they properly plead the facts for standing, that doesn’t mean you can’t inquire — that is exactly within the proof required at trial. But beyond that you can ask broader questions which might lead to the discovery of admissible evidence.
While both the attorneys and the judges might contest your right to receive information about the origination or sale of the loan, you are absolutely entitled to inquire about whether anything they said is true or if it is all a lie. And the only party who has that information, and the only party resisting with all their considerable might is the originator and the participants in the chain of the alleged securitization or even in the chain of the securitization which is denied by them. The scope of discovery is intended to be broad but to prevent mere fishing expeditions that are intrusive on the other party toward no end. They will argue that holding the note closes the issue and the judge will agree with them until you pull out the statute and point out that the proof of the actual loan is necessary in all cases except where they allege to be the holder in due course, which they never do. And having not alleged that they are obviously not alleging that they were a purchaser of the loan in good faith and without knowledge of the borrower’s defenses and before default, it is perfectly in order for you to ask which elements of a holder in due course don’t they meet and why. Since the note and mortgage arose from an alleged closing, it is perfectly acceptable for you to ask “a closing of what and for whom?” Why shouldn’t the borrower know who the lender really was? After all TILA requires exactly that disclosure. Some “successor” down the line does not get greater rights than the original lender had unless they have HDC status.
And this leads to the proof required at trial. If the alleged borrower denies that the loan contract ever took place, then the burden is on the “holder” to prove that it did take place. They must prove the loan. They must prove the funding of the loan. They must prove that they are in fact the lender. Does the court really want to grant a foreclosure against a borrower by someone who has never spent one dime lending money to the borrower, never acquired any authority from the true lender top collect and enforce?
What I know is that virtually all mortgage loans were sham transactions starting at around 2002 and continuing right up tot he present. It is up to the lawyer to educate the judge and make a clear record on appeal. That is done by both getting answers to discovery and by not getting answers that the banks and servicers are stonewalling. Don’t say you are ready for trial when you have not received answers to discovery (assuming you have already attempted to compel those answers).
I have said for years that these cases will end during discovery. either you get the order you want at which point the other side immediately settles — or you don’t get the order you want and you need to prepare your client for a loss at trial and then an appeal. Aggression during discovery is a good thing.
Filed under: foreclosure