By William Hudson
Just because you can thread a needle and replace the button on your shirt, doesn’t mean you should attempt your own vasectomy. Furthermore, just because you faithfully read LivingLies on a daily basis doesn’t mean you should organize a national Qui Tam foreclosure defense action. Despite the sophisticated knowledge necessary to testify about complex financial matters, The Bank of New York Mellon called on servicer Wells Fargo’s “loan verification analyst” to testify about the Bank’s standing on a note bearing a blank indorsement. The loan verification analyst testified that she had learned about the transfer through research she had done “on the internet” and furthermore claimed that “the internet will illustrate the transfer occurred in 2006.” Like I said, it might be best to leave the heavy-financial analysis to the experts.
In SOSA v THE BANK OF NEW YORK MELLON | FL 4DCA – the extent of the witness’s knowledge on the subject of standing and holder status is what she claims she learned from a search on “the internet.” Although this type of evidence is insufficient to establish a bank’s standing (as nonholder in possession with the rights of a holder in this particular case) the trial court thought otherwise. Sadly, millions of people have lost their homes because a bank “employee” with no personal knowledge and who didn’t possess the necessary expertise is allowed to testify on matters they are unqualified to testify upon. In Sosa, the witness didn’t even work for the Bank or servicer and was unable to describe the relationship between the parties.
Attorneys who fail to challenge the testimony of such a witness, fail to file a motion to strike or allow an Affidavit to stand that is proffered by an unqualified individual- are not defending their client’s interests. In light of this case it might be wise to remember that an affidavit or declaration used to support or oppose a motion must be made on personal knowledge, should set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated. Specifically, an affidavit used to support or oppose a motion for summary judgment must be made on: a) personal knowledge b) must be based on facts that are admissible in evidence, and must c) show that the affiant or declarant is competent to testify on the matters stated in the affidavit.
Absent personal knowledge, statements in an affidavit are hearsay and generally inadmissible as evidence. In the case of Sam’s Riverside, Inc. v. Intercon Solutions, Inc., 790 F. Supp. 2d 965 (S.D. Iowa 2011), outlines the significance of the personal-knowledge requirement for affidavit evidence in a trademark-infringement lawsuit. The judge in Sam’s Riverside rejected the plaintiff’s employee’s declaration that stated that Internet screen shots were true and accurate representations of certain web pages operated by the defendant because the affidavit did not establish the declarant’s personal knowledge of that information.
An employee testifying on behalf of a bank who glances at a computer screen does not possess the necessary personal experience to have an understanding of complex financial instruments as well as the private side of the mortgage transaction. The employee should be deposed and asked more than the usual, “Did you read the defendant’s account screen?” The court noted in Sam’s Riverside that the declaration did not state that the declarant had ever visited the web pages or that he had personal knowledge about the contents of the websites mentioned. Sam’s Riverside teaches that a good affidavit should not merely state that it is based on personal knowledge, but instead, it must show how the affiant obtained such personal knowledge. In the world of mortgage securitization- the people who created the system most likely couldn’t explain it to a judge, let alone an employee low on the totem pole.
It is well settled that statements in affidavits based “on information and belief” violate the personal-knowledge requirement of Rule 56(c). Other qualifying statements, however, like stating “to my knowledge” or “I believe,” cause confusion when assessing whether the personal-knowledge requirement is satisfied. Because of this “to my knowledge” qualifier, the court should hold that there is no admissible evidence to establish that most servicers own the debt and should be paid, let alone should summary judgment be issued in favor of a lender when the rules of evidence are not satisfied. Courts have uniformly ruled that the term “to my knowledge” is redundant and legally insignificant-especially when the bank employee has absolutely no knowledge about the complex financial transactions they are being called to testify upon.
“‘The affidavit is no place for ultimate facts and conclusions of law.’” A.L. Pickens Co., Inc. v. Youngstown Sheet & Tube Co., 650 F.3d 118, 121 (6th Cir. 1981) (quoting 6 Moore’s Federal Practice, Part 2, ¶ 56.22(1) at 56-1316 (Supp. 1979)). Yet, too often an affidavit is based on opinions or false conclusions. An unqualified affiant’s opinion on legal questions should not be entitled to any weight whatsoever when it comes to testifying about a loan that was most likely never consummated and was securitized and delivered to a fictitious trust. Only the wire instructions or ledgers can legally demonstrated the transaction happened as reported. Unfortunately instead of compelling discovery so the homeowner can get to the actual facts, the homeowner will be stonewalled while the court relies on inaccurate and incompetent testimony in the form of a low-level bank employee.
Only when the testimony of an affiant is challenged by a knowledgeable attorney does the homeowner have a chance of refuting legal conclusions that are not supported by facts. Frequently, a judge will allow the bank employee to make legal conclusions or offer impermissible opinions, while the homeowner’s own attorney fails to defend against the false testimony. An affidavit, for example, should stay with the facts of a case. When an affiant declares, for example, that “the homeowner was in default” when there is no indication that the investor was not being paid by servicer advances, insurance proceeds or other coverage- the homeowner’s attorney must interject or forever let that testimony stand as fact.
In federal courts, statements in an affidavit must be excluded if they do not comply with Federal Rules of Evidence. See:Reed v. Aetna Casualty and Surety Co., 160 F.R.D. 572, 575 (N.D. Ind. 1995). Hearsay statements in an affidavit are not admissible unless the statement complies with a recognized exception to the hearsay rule. A hearsay exception that is routinely used in morgage-tort cases is the business-record exception. Reliance on “business records” does not violate the personal-knowledge requirement, as long as the affiant is qualified to, and does, set forth the detailed foundation for the business-record exception to the hearsay rule. See Fed. R. Evid. 803(6). The issue in mortgage foreclosure cases is that the business records of loan servicers are seriously deficient as far as what is going on behind the scenes. Although the database may show the homeowner stopped paying, there is unlikely an actual default. The screenshot that banks usually rely as evidence is fatally defective and should be challenged. Until the attorney has the ledgers, confirmation that the servicer paid for the note, and other evidence nothing should be assumed. Relying on copies of documents that don’t exist- like notes that are created when the borrower goes into default should not be permissible.
The latest type of fraud on the court consists of the bank possessing a signature and other elements in a computer file that enable them to reconstruct a mortgage note that doesn’t actually exist until the loan goes into default. A technician than compiles the pieces together to recreate the note. The bank employee will then attest that they have in their possession the physical “wet-ink” note. When the homeowner compels the bank to see the note they claim to have in their possession, the note will then be reported lost. How convenient. It is much easier to explain away a lost note than it is to have actual evidence that a felony has been committed.
The affiant attesting to the foundation for the business-record exception should be compelled to explain how he or she obtained such knowledge and to explain indepth what the records mean starting at the beginning of the chain of assignments. The bank records, county records are often fabricated to create the illusion of assignment. However, if you look closely at the documents, inconsistencies can be found. It is also important that homeowners monitor affidavits submitted in their case. In a recent case the Lending Lies team is aware of, counsel for CitiMortgage altered an affidavit and forged an indorsement on a note contained in an appeal. Only after the judge based her ruling on the fraudulent Affidavit, did the homeowner discover that documents presented in the lower court had been altered and submitted in the appellee brief. The homeowner is proceeding with criminal charges against CitiMortgage and their counsel.
It is imperative that the homeowner and attorney leave no stone unturned in order to get to the “real story”. It is also important that both homeowner and attorney keep an eye on case documents to ensure the bank doesn’t resort to altering documents mid-trial. In most foreclosure defense cases the bank cannot meet the burden of proof if challenged and unless the judge accommodates an unqualified witness whose testimony will be used to foreclose on an unsuspecting homeowner.
The affiant must establish that he or she is competent to lay the foundation or make the statements in the affidavit. See Fed. R. Evid. 602. Information regarding the affiant’s position with the company, job duties, and responsibilities, as well as that person’s knowledge of the company’s record-making and record-keeping practices should be documented. The witness should be examined on the company’s computer systems, how and when information is put into the computer system, and especially about the ledger, who the homeowner’s payments are forwarded to (if any) and if they are aware if the investors are being paid. Typically all a bank witness can testify about is a computer file containing information they have no control over.
Personal knowledge is often inferred by the judge based on an affiant’s position and the nature of the matters to which he or she testifies in the affidavit. For example, an employee who indorses mortgage notes as Vice President may be a contract employee with a rubber stamp. The majority of bank employees testifying on behalf of the bank are not competent to testify on complex legal and financial matters. An affiant’s personal knowledge and competence should not be presumed.
To challenge an affidavit that does not meet the standard requirements, requires that litigants file a motion to strike the affidavit in a timely manner and be specific as to the portions of the affidavit that are being challenged. See, e.g., Jones v. Owens-Corning Fiberglas Corp., 69 F.3d 712, 718 (4th Cir.1995). Failing to strike a motion waives your right to challenge the affidavit on appeal. This can be a fatal failure and all elements of an appeal should be vetted. An appeal that is too general can be struck. An affidavit made in bad faith or done to delay a case can result in an award including attorney’s fees (see: Fed. R. Civ. P. 56(h)). In the case of a fraudulent affidavit intended to deceive the court, sanctions and a judgment against the bank should be issued.
Merely alleging that documents have been robo-signed in order to obtain a new cause of action will not be granted, and attorneys who have attempted to do so have been unsuccessful. See, e.g., Me Lee v. LNV Corp., 2012 WL 1203403 (C.D. Cal. April 10, 2012-dismissing robo-signing allegations couched as an attempt to plead fraud claim). Singer v. BAC Home Loans Servicing, LP, 2011 WL 2940733, *2 (D. Ariz. July 21, 2011- holding that allegations of robo-signing do not constitute a plausible claim for relief). Homeowners must present more than bare allegations of ‘robosigning’ without any other factual support. Forensic document examiner Gary Michaels has built a successful practice finding document irregularities including digital alteration, forged signatures, metadata left on original documents and jpeg distortion that the naked eye cannot see. Again, when the homeowner obtains hard evidence of fraud, challenges bank affidavits and demands to see the actual evidence- the banks have a tendency to back down and start negotiating with the homeowner.
Obviously, it is critical for affidavit statements to be truthful, but it is equally important that the procedural aspects of obtaining evidence ensure its reliability and admissibility, especially with evidence that the banks are engaging in gross fraud to create the illusion of ownership through fraudulent documents and false affidavits. Banks that have taken shortcuts like the bank did in Sosa v. Bank of New York Mellon will lose if the affiant’s knowledge is challenged. Furthermore, banks that attempt to automate the process will eventually get sloppy and slip up if a competent foreclosure attorney authenticates documents, and attacks the witnesses qualifications. It is also important that an attorney ensure that the affiant is testifying on the documents submitted in the case, not a new set of documents that bank counsel slipped into the record unbeknownst to the homeowner. Conducting an investigation on the documents and affiant in a foreclosure case, now takes the skill of an attorney prosecuting a criminal. Also make sure the affiant has the documents properly notarized and that the affidavit is done under penalty of perjury.
In the case of Sosa v. Bank of New York Mellon, the judge ruled that the evidence submitted was not competent to establish the bank’s standing as nonholder in possession with the rights of the holder, but getting to this point took skill on the part of the attorney. Had the attorney allowed the affiant’s testimony to stand the homeowner would have lost on appeal. Judges May and Judge Gerber are judges that apparently understand that when the rule of law is followed the right party will prevail.
See more at: http://stopforeclosurefraud.com/2016/03/24/sosa-v-the-bank-of-new-york-mellon-fl-4dca-the-witnesss-entire-body-of-knowledge-on-the-subject-was-limited-to-what-the-witness-learned-from-a-search-on-the-internet-su/#sthash.BmGMLqB7.dpuf