I produced a memorandum as an expert witness and consultant in litigation support for a lawyer in California that after re-reading it, I think would be helpful in all foreclosure litigation. I have excerpted paragraphs from the memo and I present here for your use.
Plaintiff/Appellant has pre-empted the opposing parties with a lawsuit that seeks to determine with finality the status and ownership of her loan. She has received, in and out of court, conflicting answers to her questions. The Defendant/Appellees continue to stonewall her attempt to get simple answers to simple questions — to whom does she owe money and how much money does she owe after all appropriate credits from payments received by the creditor on her mortgage loan.
She does not take the position that money is not owed to anyone. She asserts that the opposing parties to this litigation are unable and unwilling to provide any actual transaction information in which the subject loan was originated, transferred or acquired. If she is right none of them can issue a satisfaction and release of mortgage without further complicating a tortuous chain of title — and none of them had any right to collect any money from her. A natural question arising out of this that Plaintiff/Appellant seeks to answer is who is the creditor and have they been paid? If they have been paid or their agents have been paid, how much were they paid and on what terms if the payments were from third parties who were strangers to the original loan contract between the Plaintiff/Appellant and the apparent originator.
She asserts that based upon the limited information available to her that the original debt that arose (by operation of law) when she received the benefits of a loan was mischaracterized from the beginning, and has changed steadily over time. She asserts that the “originator” was a sham nominee and the closing documents were both misrepresented as to the identity of the lender, and incomplete because of the failure to disclose the real terms of a loan that at best would be described as partially represented on a promissory note and partially represented on a certificated or uncertificated “mortgage bond.”
Neither the actual lender/investors nor the homeowner/borrower were parties to the contract for lending in which the Plaintiff/Appellant was a real party in interest. And the homeowner/borrower in this case was not party to the promise to repay issued to the actual lenders (investors) who advanced the money. The investor/lenders were party to a bond indenture, prospectus and pooling and servicing agreement, while the borrower was party to a promissory note and deed of trust. It is only by combining the two —- the bond and the note — that the full terms of the transaction emerge — something that the major banks seek to avoid at all costs.
When it suits them they characterize it as one cloud of related transactions in which there is a mysterious logic, and when it suits them otherwise they assert that the transactions and documents are not a cloud at all but rather a succession of unrelated individual transactions. Hence they can foreclose under the cloud theory, but under the theory of individual (step) transactions, they don’t have to account for the receipt of exorbitant compensation through tier 2 yield spread premiums, the receipt of insurance, servicer advances, credit default swaps, over-collateralization, cross collateralization, guarantees and other hedge contracts; under this theory they were not acting as agents for the investors (whom they had already defrauded) when they received payments from third parties who thought that the losses on the bonds and loans were losses of the banks — because those banks selling mortgage bonds, while serving as intermediaries, created the illusion that the trillions of dollars invested in mortgage bonds was actually owned equitably and legally by the banks.
Plaintiff/Appellant seeks to resolve this conflict with finality so she can move on with her life and property.
If she is right, several debts arose out of the subject transaction and probably none of them were secured by a valid deed of trust or mortgage. If she is right the issues with her mortgage debt have been mitigated and she can settle that with finality and it is possible that she owes other parties on unsecured debts who made payments on account of this loan, by reason of contracts to which the Plaintiff/Appellant was not a party but which should have been disclosed in the initial loan contract. In simply lay language she wants an accounting from the real creditor who would lose money if they did not receive payment or credit toward the balance due on the loan for principal and interest.
If she is wrong, then the loan is merely one debt, secured by a valid deed of trust. But one wonders why the banks have steadfastly stonewalled any attempts to establish this as a simple fact by producing the actual record of transactions and passage of money exchanging hands in real transactions that support any appearance or presumption of validity of the documents that are being used by her opposition to claim the right to collect on the loan that she freely admits occurred. Why did the bank oppose her attempts at discovery before litigation and after litigation began?
If she is wrong and no third party payments were made, then the bookkeeping and accounting entries of the opposition would show that the loan was posted as loan receivable, with an appropriate reserve for default on the balance sheet, and there would be an absence of any documentation showing transfer or attempted transfer of the loan to a party who actually was the source of funds for the origination or acquisition of the loan. The same books and records would show an absence of any entries that reduce the balance due on the loan. And the loan file correspondence of the opposition would not have any reference to fees earned for servicing the loan on behalf of a third party and the income statement would have no underlying bookkeeping entries for receiving fees for acting as the lender, acting as the servicer or acting as a trustee.
In some ways this is an ordinary case regarding a deprivation of due process in connection with the potential forfeiture of property and present denial of access to the courts. She is left with both an inability to determine the status of her title, whether it is superior to any claim of encumbrance from the recorded deed of trust, the status of the ownership of her loan where she could obtain a satisfaction of mortgage from a party who either was the creditor or properly represented the creditor, or whether her existing claims evolve into other claims under tort or contract — i.e., a consequent forfeiture of potential claims against the Appellant’s opposing party. For example, by denying the Plaintiff/Appellant’s motions to compel discovery, Plaintiff/Appellant was denied access to information that would have either settled the matter or provided Plaintiff/Appellant with the information with which to prove her existing claims and would most likely have revealed further causes of action. The information concerning the ownership status of her loan, and the true balance of her loan is essentially the gravamen of her claim.
But if, as she suspects and has alleged, the parties purporting to be the lender or successor to the lender have engaged in no actual transactions in which the loan was originated or acquired, then the claims and documents upon which her opposition relies, are obviously a sham. This in turn prevents her from being able to contact her real lender for satisfaction, refinance, or modification of her loan under any factual scenario — because the parties with whom she is dealing are intentionally withholding information that would enable her to do so. Hence their claims and documents would constitute the basis for slander of title if she is right about the actual status and balance of her loan.
Her point is not that this Court should award her a judgment — but only the opportunity to complete discovery that would act as the foundation fro introduction of appropriate testimony and evidence proving her case. The trial court below essentially acted in conflict with itself. While upholding her claims as being sufficient to state causes of action, it denied her the ability to conduct full discovery to prove her claim.
Hagar v. Reclamation Dist., 111 U.S. 701, 708 (1884). “Due process of law is [process which], following the forms of law, is appropriate to the case and just to the parties affected. It must be pursued in the ordinary mode prescribed by law; it must be adapted to the end to be attained; and whenever necessary to the protection of the parties, it must give them an opportunity to be heard respecting the justice of the judgment sought. Any legal proceeding enforced by public authority, whether sanctioned by age or custom or newly devised in the discretion of the legislative power, which regards and preserves these principles of liberty and justice, must be held to be due process of law.” Id. at 708; Accord, Hurtado v. California, 110 U.S. 516, 537 (1884).
685 Twining v. New Jersey, 211 U.S. 78, 101 (1908); Brown v. New Jersey, 175 U.S. 172, 175 (1899). “A process of law, which is not otherwise forbidden, must be taken to be due process of law, if it can show the sanction of settled usage both in England and this country.” Hurtado v. California, 110 U.S. at 529.
686 Twining, 211 U.S. at 101.
687 Hurtado v. California, 110 U.S. 516, 529 (1884); Brown v. New Jersey, 175 U.S. 172, 175 (1899); Anderson Nat’l Bank v. Luckett, 321 U.S. 233, 244 (1944).
Non-Judicial Proceedings.—A court proceeding is not a requisite of due process.688 Administrative and executive proceedings are not judicial, yet they may satisfy the due process clause.689 Moreover, the due process clause does not require de novo judicial review of the factual conclusions of state regulatory agencies,690 and may not require judicial review at all.691 Nor does the Fourteenth Amendment prohibit a State from conferring judicial functions upon non-judicial bodies, or from delegating powers to a court that are legislative in nature.692 Further, it is up to a State to determine to what extent its legislative, executive, and judicial powers should be kept distinct and separate.693
The Requirements of Due Process.—Although due process tolerates variances in procedure “appropriate to the nature of the case,”694 it is nonetheless possible to identify its core goals and requirements. First, “[p]rocedural due process rules are meant to protect persons not from the deprivation, but from the mistaken or unjustified deprivation of life, liberty, or property.”695 Thus, the required elements of due process are those that “minimize substantively unfair or mistaken deprivations” by enabling persons to contest the basis upon which a State proposes to deprive them of protected interests.696 The core of these requirements is notice and a hearing before an impartial tribunal. Due process may also require an opportunity for confrontation and cross-examination, and for discovery; that a decision be made based on the record, and that a party be allowed to be represented by counsel.
688 Ballard v. Hunter, 204 U.S. 241, 255 (1907); Palmer v. McMahon, 133 U.S. 660, 668 (1890).