Evidence: No Magic Bullet

Information is not the same as Evidence. It’s only evidence if the Judge (1) rules it is evidence and (2) admits it into evidence into the court record. Once admitted, the Judge is free to consider the information with as much or as little weight as it chooses.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-
Nearly all pro se litigants and too many lawyers combine a shotgun approach on legal argument and a single focus on unprovable facts. More than judicial bias, the presentation of information in court lies at the heart of “bad” decisions by the the courts. Combining presentation deficiencies with bad pleading and an utter failure to control the narrative, such litigants and their lawyers are doomed to failure.
 *
This is a summary of the subject of evidence at trial, as I see it. Information, testimony, documents and the public domain are the sources of information from which litigants and their lawyers draw conclusions and develop a narrative of the case. None of these constitute “evidence” and will therefore be ignored or ruled irrelevant by a court of law unless a court rules that the data or information is somehow connected to the case at hand. Even allegations of patterns of conduct are insufficient to support the proffer of such information unless the information is coupled with direct evidence (testimony, documents) connecting the behavior of the bank or servicer with the case at hand.
 *
Nothing is evidence that can be considered by the trier of fact (Judge, jury) unless the judge rules that it is evidence AND that it is admissible in the case at hand. Unless the homeowner can show that the preferred evidence is relevant to a defense or avoidance, the Judge has no choice but to exclude the information from evidence and thus from the Court record.
 *
My observation is that there are four levels of “EVIDENCE:”
  • General information not directly related to the case at hand
  • Specific information that is relevant to the defenses raised.
  • Persuasive evidence supporting either defenses or avoidance
  • Conclusory evidence that inescapably leads to a result either by logic or rule of law.
 *
INFORMATION AND BELIEF: Pro se litigants understandably don’t understand the difference between general information and the rules of evidence. They come to court with information from the media or other sources showing what they think is evidence of wrong-doing and they are frequently right. But information about wrong-doing in OTHER cases is not evidence of wrongdoing in your case.
 *
RELEVANT INFORMATION and EVIDENCE: Testimony, such as those cases where the bank or servicer mislead the homeowner by steering them into default through assertions that a workout or modification is only possible if they are 90 days behind is information. It is also evidence that the court will generally allow in evidence. But allowing it into evidence doesn’t mean that the trier of fact will give it any weight when coming to a decision. The well-versed lawyer will ask for the recordings of the conversations in which such misleading representations were made. More often than not the recordings are said not to exist. Their alleged nonexistence can be challenged by information, ruled as evidence by the court, that all other conversations had been recorded. The absence of conversations regarding the modification MIGHT be used as evidence of concealment and corroboration of the homeowner’s testimony that he/she was mislead into stopping payments and thus going into default.
 *
PERSUASIVE EVIDENCE: Just because information is allowed into the record as evidence doesn’t mean the trier of fact will use it in making a decision. As related in the preceding paragraph you can see how raw information becomes relevant evidence and then evolves into persuasive evidence. You are always working against the beginning supposition that no bank would want a loan to become non-performing. And you probably can’t prove that policy, although there have been occasions where testimony or recordings were admitted into evidence showing that the purpose of the alleged servicing company was to obtain a foreclosure judgment and foreclosure sale. Even then, the Judge is left wondering why such a policy would exist, using the reasonable man foundation for believing that the rational thing to do as a lender is to collect on a debt, not to waste the collateral or the debt. Thus the level of persuasion in order to win is much higher in that context.
 *
CONCLUSORY EVIDENCE: This falls into two categories — legal presumptions that are outside the judge’s scope of discretion and “weight of the evidence”that remains within the scope of the judge’s discretion. It is rare that you can introduce anything that requires the judge to rule in favor of the homeowner. But the reason why “greater weight of the evidence” is the rule is that the trier of fact is receiving evidence that cumulatively leads inescapably to the conclusion that the foreclosure is defective. Evidence does not rise to this level unless the robo-witness on the witness stand acts or says irrational things. I call this the “Perry Mason moment.” This is eminently possible in a proper cross examination because the robo-witness’ knowledge is intentionally limited and usually nonexistent as to the workings of the REMIC Trust, the distribution of income from servicer to the “creditor”, and the agreements in which servicing has been created or changed.
 *
Actual Example from My Recent Trial in Orlando:
Q: Here is the Power of Attorney you introduced as evidence that is signed by Chase. And here is the Pooling and Servicing Agreement. Can you show me where Chase is mentioned as being in the chain of ownership or authority?
A: NO.
Q: NO?
A: NO.
Q: Don’t you want to look?
A: NO.
At that moment the court was left with the inescapable conclusion that Chase had no authority to execute the POA and that the Plaintiff’s case had failed.

The Affiant who googled Bank of New York Mellon had “Standing”

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.

 
Personal Knowledge
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.

 
Facts—Not Opinions
“‘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.

 
Admissible Evidence
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.

 
Competent Witness
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.

 

Challenging Affidavits
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.

 
Conclusion
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

4th DCA Florida gets It!! Judgment Reversed for Borrower! HSBC Goes Down in Flames

For More Information please call 954-495-9867 or 520-405-1688

This is not a legal opinion on your case. Get a lawyer.

=====================================

This case is important for many reasons:

  1. It is short. While that seems inconsequential, it seems highly significant to me that the 4th DCA would reverse the trial judge and direct entry of judgment for the Borrower based upon the application of simple laws and rules that I have been advocating for 8 years.
  2. It does not remand for a new trial or further proceedings. it directs that judgment be entered for the borrower. End of story.
  3. Standing: If the foreclosing party lacks standing it doesn’t matter how many payments were allegedly “missed.” A party who has no injury or interest in the subject matter cannot bring the claim.
  4. The assignment and the note “endorsement” was after the suit was filed. Hence at the time of the filing of the foreclosure lawsuit, there could be no standing and therefore the lawsuit should have been dismissed. It is for that reason that the 4th DCA directs judgment for the borrower.
  5. The burden of proof is on the bank — not the borrower. IN order to sustain a complaint at trial, the burden of proof is on the alleged creditor to prove its standing. AND THAT MEANS that discovery demands, routinely rejected by judges, can be enforced.
  6. The alleged endorsement was undated: The Court found that an undated endorsement cannot prove standing. The witness at trial must testify that he/she knows everything relevant about the endorsement, who did it, when and why. Robo-witnesses don’t have that information because the bank won;t let them have it. If they did have that information they would either be required to reveal that there was no underlying transaction, or perjure themselves.
  7. The court completely accepts the fact that the banks are backdating documents and it says backdating an assignment does nothing to help the bank. In other words, lying about it doesn’t cure the bank’s case.
  8. EVIDENCE: The witness testified that he knew nothing other than what he could see on the face of the assignment. As I have said for 8 years, that is pure hearsay — simply reading a document into the record does not mean that the recitals in the document are true. The fact that it is a document doesn’t mean it is a business record. And the fact that it is a business record doesn’t mean it is a valid exception to the hearsay rule. Judges, by the thousands ruled in millions of cases that such a proffer was admissible evidence. They were and remain wrong for doing so. If the witness cannot testify from personal knowledge about the matters asserted in a document, then neither the witness nor the document can be admitted into evidence. The question is not whether the the witness correctly read aloud what was in the document (probably backdated and forged). The question is whether the information on the document is reliable and trustworthy and true. A document could have the appearance of reliability and trustworthiness but the recitals in the document might not be true. The homeowner cannot cross examine a document and a homeowner cannot cross examine a witness about the accuracy of the matters asserted in the document if the witness knows nothing except what is written on the document.

=====================================

JUNIOR A. HARRIS,
Appellant,

v.

HSBC BANK USA, NATIONAL ASSOCIATION,
as Trustee for NAAC Mortgage Pass-Through Certificates Series 2007-1,
Appellee.

No. 4D14-54

[September 9, 2015]

Appeal from the Circuit Court for the Seventeenth Judicial Circuit, Broward County; Cynthia G. Imperato, Judge; L.T. Case No. CACE08029493(11).

Kenneth V. Hemmerle, II, Fort Lauderdale, and Richard P. McCusker, Jr., Delray Beach, for appellant.

Donna L. Eng, Michael K. Winston, and Dean A. Morande of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee.

GERBER, J.

The borrower appeals from a final judgment of foreclosure entered for the bank after a trial. The borrower argues that the bank failed to prove it had standing when it filed the action. We agree and reverse for entry of judgment for the borrower.

The bank’s original complaint attached a copy of a note payable to another entity. The note did not contain an endorsement.

The bank later filed a second amended complaint. Attached were copies of the note and an assignment of the note. The note now contained an endorsement to the bank. However, the endorsement was undated. The assignment purported to transfer the note to the bank on an “effective” date before the bank filed its original complaint.

However, the assignment was executed after the bank filed its original complaint.

The borrower answered and raised lack of standing as an affirmative defense. The borrower argued that the endorsement was undated and the assignment was executed after the bank filed its original complaint.

At trial, the bank introduced into evidence the original note and the assignment. On the factual issue of whether the note was assigned to the bank before or after the bank filed the original complaint, the bank’s witness possessed no knowledge or information other than what the assignment’s face reflected.

After the close of all evidence, the trial court entered a final judgment of foreclosure for the bank.
This appeal followed. Our review is de novo. See Lloyd v. Bank of N.Y. Mellon, 160 So. 3d 513, 514 (Fla. 4th DCA 2015) (“We review the sufficiency of the evidence to prove standing to bring a foreclosure action de novo.”) (citation omitted).

We agree with the borrower that the bank failed to prove it had standing when it filed the action. We reach this conclusion for three reasons.

First, the note’s endorsement to the bank was undated. See Matthews v. Fed. Nat’l Mortg. Ass’n, 160 So. 3d 131, 133 (Fla. 4th DCA 2015) (“[T]he note introduced at trial . . . did not establish standing when the suit was commenced. The blank endorsement was undated.”).

Second, the assignment was “backdated” after the bank filed the action. See id. (“Nor does the backdated assignment, standing alone, establish standing.”) (citation omitted); Vidal v. Liquidation Props., Inc., 104 So. 3d 1274, 1277 n.1 (Fla. 4th DCA 2013) (“Allowing assignments to be retroactively effective would be inimical to the requirements of pre-suit ownership for standing in foreclosure cases.”).

Third, on the factual issue of whether the note was assigned to the bank before or after the bank filed the original complaint, the bank’s witness possessed no knowledge or information other than what the assignment’s face reflected. See Lloyd, 160 So. 3d at 515 (“Plaintiff’s evidence supporting its claim that the assignment . . . ‘related back’ to before the suit commenced was also insufficient to prove standing in this case. The witness testified that he did not have any information, other than the document itself, to verify when the assignment took place.”).

Based on the foregoing, we reverse and remand for entry of judgment for the borrower.

Reversed and remanded.

GROSS and DAMOORGIAN, JJ., concur.

– See more at: http://stopforeclosurefraud.com/2015/09/09/harris-v-hsbc-bank-usa-na-notes-endorsement-to-the-bank-was-undated-the-assignment-was-backdated-factual-issue-of-whether-the-note-was-assigned-to-the-bank/#sthash.FLUGXD2A.ynDnEINB.dpuf

What is Evidence or Proof of the Existence of the REAL Loan?

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

————————————

It is a complicated answer. The following is NOT a comprehensive answer which would the length of a treatise.

see also Fla 4th DCA Beauchamp v Bank of New York Mellon, J Shahood reversed — Beauchamp v BONY-Mellon

The Beauchamp case brings to the forefront the issue of redemptive rights which has long been ignored. In short the 4th DCA decided that the redemptive rights are important. They decided that evidence of actual losses or damages must be established without relying on inadmissible hearsay. This is where the rubber meets the road. In order to do so the Plaintiff foreclosing party is open in discovery at the very least to showing actual proof of payment and proof of loss of the actual owner of the debt and/or holder in due course. Presumptions won’t do them any good unless the homeowner’s attorney fails to object.

Thus the real transaction with real money, in a real purchase of the loan must be established by the foreclosing party. That is part of their prima facie case. And these are liquidated contract damages — not subject to anything other than mathematical calculation of net loss. I doubt if the appellate court meant to empower the judge to “estimate” or enter a finding that is “good enough.” The homeowner, like the AMGAR program, has every right to pay off the net debt once it is established and thus prevent the sale of the home. In turn the homeowner is entitled to the recovery of the original note and mortgage or deed of trust.

Be careful because it is evidently a normal practice, contrary to current case law, for the foreclosing party in non judicial states to publish and record a self serving statement of standing in the form of a substitution of trustee. That substitution of trustee must be nullified or else the rest of the theories advanced by the homeowner might be deemed irrelevant.

The interesting thing on remand is what happens when the foreclosing party cannot show proof of payment (proof of actual transaction ) and tries to get the judge to assume that the loss is the amount on the note. If that were the case the 4th DCA would not have remanded for further proceedings to determine damages so that the borrower’s redemption rights could be established. Without a completely transparent introduction of testimony and BEST evidence of original transaction documents, there is no proof of damages and the foreclosure judgment must be vacated.

In loan transactions there usually is no actual written contract that says the creditor will loan money and the debtor will pay it back. So common law and statutory law must make certain assumptions about the loan contract — which still must exist in order for the note or mortgage to be enforced. This is till basic contract law — the elements of which are offer, acceptance and consideration each to the other. The stumbling block for most judges is that the presence of money at the table is automatically construed as consideration for the contract that is sought to be enforced.

In olden times there was no problem in using this heuristic approach to loan contracts, because nobody thought of some third party funding the loan WITHOUT a note and mortgage made out in favor of the actual creditor. But Wall Street found a way to do it and conceal it.

The actual debt — i.e., the duty to pay — arises by operation of law when the debtor receives the money. It is presumed to be a loan and not a gift. The paperwork is intended to provide disclosures and terms and evidence upon which both parties can rely. In this context before Wall Street saw the vulnerability, there was no problem in using the words “debt”, “note”, “mortgage” and “loan” interchangeably — because they all essentially meant the same thing.

The genius of the Wall Street scheme is that their lawyers saw the possibilities in this informal system. The borrower could not claim lack of consideration when he received the money and thus the debt was presumed. And with enough layers of deception, non-disclosure and outright lies, neither the borrower nor even the closing agent actually realized that the money was coming from Party A but the paperwork was directed to Party B. Nobody realized that there was a debt created by operation of law PLUS another debt that might be presumed by virtue of signing a note and mortgage. Obviously the borrower was kept in the dark that for every $1 of “loan” he was exposing himself to $2 in liability.

If the creditor named as payee and mortgagee was not the source of the funds then there is no underlying debt. The rules of evidence are designed to help the court get tot eh truth of the matter asserted. The truth is that the holder of the paper is NOT the party who was the creditor at “closing.” The closing was fictitious. It really is that simple. And it is the reason for the snowstorm of fabricated, forged and robosigned documents to cover up the essential fact that there is not one shred of consideration in the origination or transfer of many loans.

Each assignment, endorsement, power of attorney or other document purporting to transfer control or ownership over the loan documents is corroboration of the lack of consideration. Working backwards from the Trust or whoever is claiming the right to enforce, you will see that they are alleging “holder” status but they fail to identify and prove their right to enforce on behalf of the holder in due course or owner of the debt (i.e., the creditor).

Close examination of the PSA shows that they never planned to have the Trust actually acquire the loans — because of the lack of any language showing how payment is being made to acquire the loans within the cutoff period. THAT was the point. By doing that the broker dealers were able to divert the proceeds of sale of Mortgage Backed Securities to their own use. And when you look at their pleading they never state they are a holder in due course. Why not? If they did, there would be no allowable defenses from the borrower. But if they alleged that they would need to come forward with evidence that the Trust purchased the debt for value, in good faith and without knowledge of the borrower’s defenses — elements present in every PSA but never named as “holder in due course.”

Since the good faith and lack of knowledge of borrower’s defenses is probably not in hot dispute, that leaves only one element — payment. The logical question is why would the assignor or endorser transfer a valuable debt without payment? The only reasonable conclusion is that there is no underlying debt — there is paper but the power of that paper is at very best highly speculative. “Underlying debt” means that the alleged borrower does not owe any money to the party named as payee on the note.
Traveling down the line, seeking for evidence of payment, you don’t find it. Even the originator does not get “paid” for the loan but assigns or endorses the paperwork anyway. No reasonable business explanation can be found for this free transfer of the paper except that the participants knew full well that the paper was worthless. And THAT in turn is presumptive proof that there was a lack of consideration for the paperwork — meaning that the debt was owed to an outside party who was never in privity with the “originator.”
If someone has possession of a note, it is an original and it complies with local statutes as to form and content, the note is accepted as evidence of the debt, and the terms of repayment. The person who signed the note is at risk of a judgment against him only if he defaults or the note falls into the hands of a holder indue course. Of course if the note IS evidence of a loan that WAS funded by the named payee, that is a different story. But looking a little further up the line, you will eventually find that one or more alleged transfers of the paperwork did not involve payment. And the reason is the same as the above. In the end, the money came from illegal diversion of investor funds that were intended to be deposited with a REMIC Trust.

If the signer of the note denies that the transaction was complete — i.e., there was no consideration and therefore there is no enforceable contract, then the burden switches back to the “holder” of the note to step into the shoes of the original lender to prove that the loan actually occurred, the original lender was the creditor and the signer was the debtor.

Why Is the PSA Relevant?

Many judges in foreclosure actions continue to rule that the securitization documents are irrelevant. This would be a correct ruling in the event that there were no securitization documents. Otherwise, the securitization documents are nothing but relevant.

There are three scenarios in which the securitization documents are relevant:

  1.  The party claiming to be a trustee of a trust is claiming to have the rights of collection and foreclosure.
  2.  The party claiming to be the servicer  for a trust is claiming to have the rights of collection and foreclosure.
  3.  The party claiming to be the holder with rights to enforce is claiming to have rights of collection and foreclosure. If the party claims to be a holder in due course, the inquiry ends there and the borrower is stuck with bringing claims against the intermediaries, being stripped of his right to raise defenses he/she could otherwise have made against the originator, aggregator or other parties.

The securitization scheme can be summarized as follows:

  1.  Assignment and Assumption agreement:  This governs procedures for the closing. This is an agreement between the apparent originator of the loan and an undisclosed third-party aggregator. This agreement exists before the first application for loan is received by the originator, and before the alleged “closing.” It governs the behavior of the originator as well as the rights and obligations of the originator. Specifically it states that the originator has no rights to the whatsoever. The aggregator is used as a conduit for the delivery of funds to the closing table at which the borrower is deceived into thinking that he received a loan from the originator when in fact the funds were wired by the aggregator on behalf of an unknown fourth party. The unknown fourth party is a broker-dealer acting as a conduit for the actual lenders. The actual lenders are investors who believe that they were buying mortgage bonds issued by a REMIC trust, which in turn would be using the money raised from the offering of the bonds for the purpose of originating or acquiring residential loans. Hence the assignment and assumption agreement is highly relevant because it dictates the manner in which the closing takes place. And it demonstrates that the loan was a table funded loan in a pattern of conduct that is indisputably “predatory per se.” It also demonstrates the fact that there was no consideration between originator and the borrower. And it demonstrates that there was no privity between the aggregator and the borrower. As the closing agent procured the signature of the borrower on false pretenses. Interviews with document processors for both originators closing agents now show that they would not participate in such a closing where the identity of the actual lender was intentionally withheld.
  2.  The pooling and servicing agreement: This governs the procedures for collection, disbursement and enforcement. This is the document that specifies the authority of the trustee, the servicer, the sub servicers, the documents that should be held by the servicer, the servicer advance payments, and the formulas under which the lenders would be paid. Without this document, none of the parties currently bring foreclosure actions would have any right to be in court. Without this document trustee cannot show its authority to represent the trust or the trust beneficiaries. Without this document servicer cannot show that it performed in accordance with the requirements of a contract, or that it was in privity with the actual lenders,  or that it had any right of enforcement, or that it computed correctly the amount of payment required from the borrower and the amount of payment required to be made to the lenders. It also specifies the types of third party payments that are made from insurance, swaps and other guarantors or co-obligors.
  3. Of specific importance is the common provision for servicer advances, in which the creditors are receiving payments in full despite the declaration of default by the servicer.  In fact, the declaration of default by the servicer is actually an attempt to recover money that was voluntarily paid to the creditor. It is not correctly seen as a declaration of default nor any right to demand reinstatement nor any right to accelerate because the creditor is not showing any default. It is a disguised attempt to assert a claim for unjust enrichment because the servicer made payments on behalf of the borrower, voluntarily, to the creditor that are not recoverable from the creditor. Usually they make this payment by the 25th of each month. Hence any prior delinquency is cured each month and eliminates the possibility of a default with respect to the creditor on the residential loan.

It is argued by the banks and accepted by many judges that mere possession of the note sufficient to enforce it in the amount demanded by the servicer. This is wrong. The amount demanded by the servicer and does not take into account the actual payments received by the actual creditor. Accordingly the computation of interest and principal is incorrect. This can only be shown by reference to the securitization documents, including the assignment and assumption agreement, the pooling and servicing agreement, the prospectus and supplements to the PSA and Prospectus.

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

Why Are Trusts Alleging Holder Status and Not Holder in Due Course?

THEY ARE ADMITTING THEY DIDN’T PAY FOR THE LOAN

THIS CORROBORATES THE ALLEGATION THAT THE TRUST WAS UNFUNDED

IF THE TRUST WAS UNFUNDED IT COULD NOT HAVE ORIGINATED OR ACQUIRED THE LOAN

In situations where the alleged REMIC Trust is the party initiating foreclosure, you will find in most instances that they are alleging that they are the holder. The fact that they are not alleging that they are the holder in due course raises some interesting questions. First, it is an admission that they did not pay for the loan for value in good faith and without notice of borrower’s defenses.

This in turn leads us to the PSA where you can see for yourself that only good loans properly underwritten can be included in the trust based upon the procedures for transfer and payment that are set forth or implied in the trust instrument (the PSA). Remember that the ONLY reason the party is appearing in court as the foreclosing entity is by virtue of the Pooling and Servicing Agreement (PSA). Their ONLY authority, as a “holder with rights to enforce” derives from the trust instrument (PSA). So any argument that the PSA is irrelevant is nonsense — it should be an exhibit in court or else the foreclosure should be dismissed. If they want to argue to the contrary, they must reveal the creditor and reveal the alternative authority to enforce apart from the trust instrument. If it has anything to do with the trust or trust beneficiaries however, the document (Power of Attorney) derives its power from the trust instrument as well (PSA).

The way the Banks tell it, an assignment dated not only after the cutoff date, but after the alleged declared default of the loan forces investors to accept that which they specifically excluded in the  trust instrument (PSA) — a bad loan that violates the REMIC provisions of the Internal Revenue Code subject them to adverse tax consequences and economic losses that were NOT built into the deal. How can a state judge in Florida or any other state order or enter judgment that forces a bad loan on investors who specifically called fro a cutoff of any new loans in the pool years before the foreclosure? If the loan was already declared in default. how can the trust beneficiaries be forced to accept a bad loan?

At the very least these John Does must be given notice and since the servicer knows who they are (because they have been paying them) they should give notice to the investors that their rights may be significantly impacted by a court decision in which the servicer or trustee of the REMIC trust is taking a position adverse to the interests of the trust beneficiaries and in violation of the trust indenture.

Since the requirements of the PSA always provide for circumstances that are identical to the definition of a holder in due course, why is the allegation that they are just a holder? The answer is plain: in order to establish that they are a holder in due course their proof would be limited to the fact that they paid for the loan, in good faith and without knowledge of borrower’s defenses. That proof would insulate the trust and trust beneficiaries from borrower’s defenses by definition (see Article 3, UCC). The allegation of only being a holder, exposes the trust and trust beneficiaries to defenses that were intended to be barred by virtue of being holders in due course of each and every loan. Thus this too is an allegation contrary or adverse to the interests of the trust and the trust beneficiaries. Again without notice to the trust beneficiaries that the trustee or at least lawyers for the trustee are taking positions adverse to the interests of the investors and the trust.

What difference does it make? It makes a difference because of money which is after all what this case is supposed to be about. The investors’ money either went into the REMIC trust or it didn’t. If it did, then the trust is the right vehicle for the transaction although most PSA’s say the trust cannot bring the foreclosure action. But if it didn’t go into the REMIC trust account, and the trust was ignored in the origination and/or acquisition of the, loan then the borrower is even more entitled to know what payments the investors (f/k/a/ trust beneficiaries) have received. If there have been settlements, then how much of the original debt is left? If there were servicer payments, was there ever a default and how much of the original debt is left? If there were third party payments to the creditors then how much of the original debt is left?

What seems to be an elusive concept for judges, lawyers and even borrowers is that their debt was paid by someone else. That is what happens when you have fraudulent transactions and the perpetrators get caught. In this case, there was plenty of money available to private settle more than $1 Trillion in claims of fraud from investors and fines that are steadily increasing into the tens of billions of dollars. Because the intermediary banks had essentially stolen the identity of the lenders and the borrowers, they made claims and got paid as though they were the lenders. Now they are using the proceeds of what were disguised sales of the same loan multiple times to settle with investors and settle only with those borrowers who present a credible threat. In the end the banks are wiling to pay trillions because they got illegally trillions more.

The big question is when it will occur to enough enough judges, lawyers and borrowers that they are entitled to offset for those payments that were actually received or on behalf of the actual creditors. It isn’t a difficult computation. Thus the notice of default, the notice of the right to reinstatement, the end of month statements, and the acceleration letter all state the wrong amounts and are fatally defective. They are misrepresentations that are part of a string of misrepresentations starting with the lies told to the managers of stable managed funds who purchased, and kept on purchasing mortgage bonds issued by an apparent REMIC trust whose terms were being routinely ignored.

Thus it is not RELIEF that the borrower is asking, it is JUSTICE. The creditor is only entitled to get paid once on each debt. The creditors are the investors or trust beneficiaries. The demands made on borrowers for the last 7 years have actually been demands from the intermediaries for payment of fees, commissions and advances made or earned by them, according to their story. They are not claims on the mortgage loan, which was either paid down or paid off without disclosure to the borrower. Had the pay down or payoff been recorded and applied, virtually all of the loans that were improperly foreclosed by strangers to the original transaction (no privity) would have been avoided because the amount of the payment could have been dropped easily under HAMP. As stated repeatedly on these pages, this is not a gift of principal REDUCTION. It is justice applying a principal CORRECTION due to payment received — the ultimate defense under any lawsuit for financial damages.

For more information please call 954-495-9867.

Using the Best Evidence Rule As You Follow the Money

The Best Evidence Rule in Florida and Federal Courts Applied to Notes, Mortgages and Assignments

The problem with foreclosure litigation is that the homeowner is dealing with rebuttable presumptions about the testimony and the documents admitted into evidence. They are admitted into evidence because there is no timely objection from the homeowner or the foreclosure defense attorney.

The note, mortgage and assignment are presumed to be valid instruments if they conform to the requirements of law as to form and content. In that case they are facially valid. That means there is a rebuttable presumption that there was a valid underlying transaction. Therefore. as a matter of law, the paper presented is not just facially valid but also presumptive evidence that the transaction existed. This gets tricky in application and is one of the many reasons why lawyers should study up on courtroom procedures, evidence and objections.

On the note, the underlying transaction is the debt. The debt exists not because of the note, but because Party A put money into the hands of Party B who accepted it. The debt arises regardless of whether or not a note was executed. The note is evidence of the debt and it is presumptive evidence that there was an underlying transaction in the amount of the note. The underlying transaction is therefore the payee putting money into the hands of the homeowner, who is the payor.

On the mortgage, the underlying transaction is still the debt and the existence of the note, because a valid mortgage does not exist except if it is based upon an instrument in writing. The mortgage is not presumptive evidence of the existence of the underlying transaction (the actual loan of money from Party A to Party B). Under normal circumstances the existence of a properly executed mortgage would corroborate the evidence supplied by the note.

On the assignment, the underlying transaction is a payment of money from Assignee to the Assignor. The assignment itself might be accepted by the court as presumptive evidence that such an underlying transaction exists (in the absence of an objection). If a proper objection is raised, the presumption vanishes.

So what is a proper objection under these circumstances? Remember if you fail to raise the objection then the burden of proving the transaction did not happen falls on the homeowner. The objective here is to hold the bank’s feet to the fire and make them prove their case. And the reason for this is not to exercise your vocal chords. It is to show that the underlying transaction between the parties stated in the document proffered by the bank never took place. And the reason you are doing that is because those transactions in fact, never occurred.

The hearsay rule is an appropriate objection because the document is being used to establish the truth of the matter implied — i.e., that there was an underlying transaction. But the better objection,in my opinion, is that the existence of the underlying transaction be subject to (1) lack of foundation and (2) best evidence. They are related in this instance.

Under the rules of evidence, the note, mortgage and assignment are secondary documents that imply that a transaction took place but do not show facts to verify that the transaction actually occurred. Hence, the BEST EVIDENCE of the underlying transaction is the canceled check or wire transfer receipt showing the payment and implied acceptance of the money used to fund the loan or purchase the mortgage. Anything less than that is not admissible evidence — unless the objection is overlooked or waived. It would therefore be true that the debt from the homeowner allegedly owed to the payee on the note (and mortgage) or the assignee on the assignment is not supported by foundation in the usual circumstances.

Special note here: I have seen in reported cases that it DOES occur that litigants, including banks, have doctored up copies of wire transfer receipts. Thus any effort to introduce the copy would be met by your objection on the basis of best evidence and the argument, if applicable, that the failure to disclose the document prior to trial deprived you of your ability to confirm the authenticity of the document. Verification is possible but he banks, Federal reserve etc., will not make it easy on you so a court order will be helpful.

Normally the corporate representative of the servicer is the witness. It will usually be established on voir dire or cross examination that the witness neither had access to nor ever personally viewed any records of the actual transaction and in fact never even saw the secondary evidence (the note, mortgage and assignment) until a few days before trial. Thus no testimony will be elicited, in the ordinary course of things, that the transaction took place (i.e., an ACTUAL transaction in which money from the payee was loaned to the homeowner or money from the Assignee was paid to the Assignor). Hence no foundation exists for any testimony or any document that the debt exists or that the loan was actually sold for consideration and then assigned.

This is not a technical matter. If I agree to pay you $100 for your toaster oven, I can’t demand the appliance until I have paid it. If that was the agreement, then the underlying transaction is the payment of money. The evidence — the best evidence — of the payment is a canceled check or wire transfer receipt. The exceptions to the best evidence rule do not seem to apply and there is no adequate explanation for why anything other than direct primary evidence of the transaction itself should be admitted.

In searching the internet I found that a lawyer in West palm beach wrote a pretty good article on the subject although he was concentrating on the use of the best evidence rule in connection with duplicates. see http://www.avvo.com/legal-guides/ugc/what-is-the-best-evidence-rule-in-florida for the article by Mark R. Osherow, Esq.

Here are some excerpts from that article.

===================

The best evidence rule, set forth in Fla. R. Evid.’90.952 and Fed. Rules Evid. 1001, provides that, where a writing is offered in evidence, a copy or other secondary evidence of its content will not be received in place of the original document unless an adequate explanation is offered for the absence of the original. Fla. R. Evid. ‘90.9520-90.958; Fed. Rules Evid. 1002-1008….
Public records authentication is provided for by section 90.955 and Rule 1005. Under section 90.956 and Rule 1006 voluminous writings, recordings, or photographs which cannot be conveniently examined in court may be presented in the form of a chart, summary or calculation. Of course, admissibility of a summary depends upon the admissibility of the underlying documents. In order to use a summary, timely written notice is required with proof filed in court. Adverse parties must have sufficient time to investigate and inspect underlying records and summaries….
Fla. R. Evid. Section 90.957. Section 90.958 and Rule 1008 set forth the situations where the court determines admissibility and where the jury determines factual issues such as the existence of a document, its content, and the contents accuracy.
The best evidence rule arose during the days when a copy was usually made by a clerk or, worse, a party to the lawsuit. Courts generally assumed that, if the original was not produced, there was a good chance of either a scrivener’s error or fraud.
… there is always a danger of a party questioning a document, so it is important to remember that, unless you have a stipulation to the contrary, or your document fits one of the exceptions listed in the statute, you must be ready to produce originals of any documents involved in your case or to produce evidence of why you cannot.

%d bloggers like this: