How to Choose a Forensic Report

If you stick to an objective statement of facts without presumptions, anyone can report and testify with credibility if they have backup. Once you cross the line into opinions the report is undermined as to bias, credibility and lack of foundation. Even if it is admitted into evidence the report will be given zero weight in deciding the case.

You undermine your defense if you are relying upon presumptions instead of actual facts or the absence of actual facts. Most presumptions used by homeowners are not persuasive.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

About Neil F Garfield, M.B.A., J.D.

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Starting with the tidal wave of foreclosures that hit our shores in 2007-present, a cottage industry emerged to help homeowners contest or negotiate with the pretender lender. Some were better than others. Many were at best a good faith failed attempt at understanding the claimed process of securitization, whose hallmark is complexity and obscurity.  In the words of an executive VP at Deutsch Bank, “it is all very counterintuitive.”

The job of the forensic reporter is to break down the facts so that the defense narrative is understandable and believable. Note that in most cases the defense narrative is going to rely on the absence of facts that should be present if the claims for foreclosure were based in fact. The object should be the production of a report that actually provides traction to the defense and not merely justification for the fee received.

  • RULE #1: If the report sticks to the facts and has an adequate presentation it can serve two purposes, to wit: (a) it provides a checklist of issues for an attorney or pro se litigant to know “what is on the menu” of potential defenses and (b) it might serve as evidence or corroboration of narratives pursued in court in creating and compelling discovery, filing and arguing motions and raising well timed objections at trial. If the preparer did fact checking and investigation, it is permissible to describe inconsistencies in the available evidence that need to be reconciled.
  • RULE #2: Anyone can write a report but few people can satisfy the burden of persuasion in court. Just because something is accepted into evidence or even admitted does not mean that it will be given any weight in the final decision. So if you are going to hire someone to review, investigate and report, that person should have a credible level of knowledge and access to data. Someone who has been through a foreclosure is neither credible nor lacking in credibility, but the other side will no doubt argue that the person had a bias against the banks. Certifications are not a substitute for experience. The greater the credentials the higher the credibility.
  • RULE #3: You are starting with bias against the homeowner. So you must focus on what will persuade the trier of fact (a judge in most cases) to rule in favor of the homeowner. To be persuasive means that the facts are presented without hypotheticals or conclusions that should be made by the judge. The presentation must gradually educate the judge as to how specifically in this case, the foreclosing party should not be allowed to continue. You don’t win by pointing out inconsistencies. You win by showing that the inconsistencies cannot be resolved even with the “help” of the robo-witness at trial.
  • RULE #4: “Everybody knows” is not a defense. If there is information available that might assist in showing that the documents are self-serving, then that might be the the jump-off point for undermining the credibility of the witness and the exhibit, but it needs to be much stronger to exclude the evidence altogether. If the foreclosing party has been the target of investigations, charges and settlement agreements based upon fabrication of documents, forgery and robosigning, that could be the jump-off point to argue that the foreclosing party must present its evidence without benefit of a legal presumption.
  • RULE #5: Wording is critically important. Describing the transaction as a loan or as an assignment basically admits that the description fits. At that point you might just as well pack up and go home. The forensic report should describe documents that have a title, and and then describe the contents and any inconsistencies or disparities. But calling the document an assignment or admitting that the loan was transferred, at least implies that there was a sale of the debt. If you check the documentation you will never see anything that refers to the sale of debt, because there was no sale of the debt.
  • RULE #6: Identify the salient points of the report in a memorandum in support of discovery or motions specifically citing to the page and position of the facts revealed in the report. If the report is for internal use only, attorney work-product etc., the use of bullet points in the report is preferable. Anything that takes less time of the attorney will save time and money. Thus if you want to assert forgery of a document the examiner would state that the signature on Document A appears to be inconsistent with the same person’s signature on Document B. THEN bring in a forensic document examiner who can give an opinion as to whether it is a forgery, back it up with demonstrative exhibits. AND remember, just because there isa  forged document doesn’t mean you win and they lose. You must persuasively argue that the forgery defeats their action.
  • RULE #7: CITATION TO CASE LAW IS LEGAL ARGUMENT — not a forensic report. But the presentation could report that as part of the instructions to the examiner, it has been assumed that X v Y case and Statute § ABC has been used as a reference point.

Here at livinglies and LENDINGLIES we are on our 12th iteration of a forensic report  for homeowners or their counsel. We call it the TERA for Title and Encumbrance Report and Analysis. It is the result of review and research by paralegals who are given instruction by me usually after I get together with the client in a short or long CONSULT.

I have long said that homeowners should stick with people who have or held licenses in professions that might affect the case. And while some people may have a professional license in a relevant field you should not make the mistake, based upon this article, of limiting the scope of work performed by them, just as you should not over-broaden the scope.

After many years of doing unrelenting research and investigation there are many people who have valuable insights that should be shared with the client. So if the forensic examiner says he notices a certain pattern of facts and that this same pattern was used in another case where the homeowner won, you should be listening even though the conclusion might be outside of his report and outside of his/her area of expertise. Note that the same fact pattern is often treated differently by different courts or even the same court.

In the TERA that we currently produce, our mission is to set forth the following elements:

  1. Sufficient information to assist the homeowner (or homeowner’s counsel) in deciding whether to fight, and if so, the toward what end.
  2. Identify the factual discrepancies.
  3. Identify areas for further investigation for discovery.
  4. Identify elements that support demands for discovery.
  5. Answer specifically worded questions posed by existing counsel or me.*
  6. Provide copies of all relevant documents as exhibits to the report.
  7. Identify subject for which a Case Analysis might be of assistance as in developing the specific narrative, strategies or tactics to pursue in the case and what to avoid.

In all cases we defer to local counsel. But with the right support and and guidance most attorneys develop specific knowledge and skills to win these cases. You don’t hear about all the cases won by homeowners because the banks pay for silence in the form of confidentiality agreements.

* EXAMPLE: It is wrong to phrase the question “Does US Bank have standing?” That calls for a legal conclusion that only the court can do. The question is better phrased “What factual evidence has been produced to support the assertion that US Bank has an interest in the subject loan?”

 

 

 

Expert Testimony and Expert Reports

Homeowners are dismayed and even claim court bias when the report of a self-proclaimed expert is barred from evidence. Or they become equally incensed when the court allows the report into evidence but gives it zero weight in rendering a decision. But the court is, to that extent, merely following the rules that govern what Judges should or should not do.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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It goes without saying that any report that has not been read and any testimony that has not been heard will be disregarded as a practical matter and in many cases as a legal matter. The Internet has been awash in offers of “magic bullet” analyses and reports that either directly or indirectly make the false promise of relief from foreclosure. Nearly all of the forensic analysts are self-proclaimed, unlicensed in any field requiring a license, inexperienced and untrained. What they are seem to share in common is the hope or belief that once a Judge lays eyes on the report, the decision will be rendered swiftly in favor of the homeowner.
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Forensic analysis can theoretically be performed by anyone, which of course means that they are predominantly worthless even in their inception. Most analysts are looking for the wrong things and/or looking for things that are irrelevant and/or looking for things that will not be admitted into court record as evidence. Even an unopposed expert declaration or affidavit will either not be admitted into evidence by written report or oral testimony if it is delivered by such analysts. Homeowners are dismayed and even claim court bias when the report of a self-proclaimed expert is barred from evidence. Or they become equally incensed when the court allows the report into evidence but gives it zero weight in rendering a decision. But the court is, to that extent, merely following the rules that govern what Judges should or should not do.
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The one thing in which most “successful” forensic analysts excel is selling. They tell homeowners what they want to hear when they need to hear it. It’s akin to imbibing a libation or drug to take the edge off for the moment but it doesn’t change a thing.
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So let’s go to the other end of the spectrum. Does it matter if the analyst is unlicensed? NO. But if the analyst is unlicensed he or she will need to spend a lot more time giving testimony about how they acquired their expertise and how their work is based upon established frameworks of prior work in teases and other sources — and not merely a theory in their own head.
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But the interesting thing is that when such experts do survive the challenges under Daubert or Frye (see below) the seemingly less qualified analyst frequently is able to explain to the court how he or she arrived at an opinion and then explains both the opinion and the basis of the opinion in clearer language than most “qualified” experts with far superior credentials.
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Further the Banks’ Ostrich Strategy appears to have been working for the last 10 years. After tens of thousands of reports and expert declarations have been filed or served on behalf of homeowners, there are no reported instances in which an expert from the banks or servicers ever filed an affidavit or declaration in opposition to the experts who execute expert declarations for the homeowners. In fact, there are few instances in which the “expert” is even deposed, which thus removes the ability of the banks to challenge the expert. The end result has been that expert testimony is nearly always discounted or completely ignored. If the banks ignore it in litigation then so does the court.
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But the unwillingness to make an issue of the expert declarations filed by homeowners may well have a downside, especially as more and more Motions for Summary Judgment are filed. As the courts are gradually changing course to consider the possibility that homeowners should win and that banks should lose, the time has come to file a motion for partial summary judgment on issues specifically raised and supported in a properly drafted expert declaration.
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In the absence of an opposing affidavit, the court has little choice but to take the assertions as true as stated in the expert declaration for the homeowner. That leaves only the legal argument of whether the homeowner is entitled to the entry of summary judgment on the issues raised, inasmuch as the homeowner has effectively eliminated the issue or issues to be heard at trial.
 *
For example suppose the expert’s opinion is that the trust was never funded, that the trust has no legal authority to administer the alleged loan because the loan was not in the trust, and that the trust therefore could never have purchased the debt or the note or the mortgage, and that the “servicer” appointed as servicer in the trust instrument (PSA) has no authority because the property (i.e., the loan) was never transferred into the trust and that the Trustee named in the trust instrument (PSA) also has no power over the subject loan because the trust never purchased the loan, the debt, the note or the mortgage, and perhaps also that the foreclosure is a grand illusion in which the banks and servicers are completing a scheme of civil theft of the investors’ money, and perhaps that the debtor-creditor relationship consists of the homeowner and the investors whose identities have been withheld by the banks.
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In order to take those conclusions seriously, the court must hear that those conclusions are supported by understandable evidence that is based upon widespread axioms; since the conclusion is counterintuitive, it is important that the declaration be credible.
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Hence the expert must bring in corroboration as part of the explanation of the reasoning in the expert declaration. Corroboration could be direct evidence (by the way, hearsay is allowed in expert testimony) or clear deductive reasoning that eliminates anything else as an alternative explanation; (e.g., if the trust had actually entered into a transaction in which it purchased the alleged loan or some part of it, then it would not assert that it was a holder but rather, as is custom and practice in the industry the trust would declare itself to be a holder in due course or the actual owner of the debt (not just the note and mortgage) and would gleefully have proven the purchase by offering a canceled check or wire transfer receipt into evidence).
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By elimination of the elements of “good faith” and lack of knowledge of the borrower’s defenses (e.g. lack of consideration, non-merger of debt and note etc.) the only missing element would be that the Trust was not a successor to the original creditor regardless of whether the original creditor(s) was or were victims of theft or the actual payee on the note. Thus the conclusion that the Trust is not a holder in due course and should not be treated as one. And if it was the agent for an actual creditor, the Trust had failed to identify the creditors fro whom it was acting as agent. Note that such an admission would crash the entire trust and its beneficiaries under the weight of several violations of the Internal revenue Code turning all money handled by the “REMIC” into ordinary revenue and income.
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One trick often used to bar such expert testimony is the 11th hour challenge either the day before or during trial. One New Jersey appellate court correctly assessed the situation has revealed in the following article:
Appeals Court Reverses Grant of “11th Hour” Motion to Strike Expert

Parties will frequently seek to strike the opinions offered by their adversaries’ experts as legally insufficient. While there are a variety of bases for such motions—including that the report does not set forth the “whys and wherefores” of the expert’s opinion, or that it does not satisfy other evidentiary rules for its admissibility—the strategic purpose is clearly to weaken or even destroy the opposing party’s case by barring key testimony. These limiting, or in limine, motions typically will be brought just before trial after the expert’s opinions have been discovered and often after the expert has given deposition testimony about the support for the opinion. A recent New Jersey Appellate Division case now seems to suggest that due process requires that (1) such a limiting motion must be made with enough time for the opponent to respond adequately, and (2) the trial judge must conduct a hearing prior to deciding to exclude the challenged expert’s opinions.

The issues arose in a lawsuit over a failed real estate deal, Berman, Sauter, Record & Jardim, P.C. v. Robinson, Dkt. No. A-5650-11T3 (App. Div., Nov. 17, 2016). The plaintiff law firm sued a seller claiming that it wrongfully breached a purchase agreement and caused the law firm’s loss of fees from the deal. The defendant seller then counterclaimed and filed a third-party claim alleging that the plaintiff and third-party defendant law firms had committed legal malpractice by failing to include an express termination clause in the purchase agreement, a claim supported by the opinion of a legal malpractice expert. The plaintiff law firm filed a pre-trial motion to strike the expert’s testimony because the expert did not explain the bases for his legal malpractice conclusion and his testimony was therefore an inadmissible “net opinion.” One week before trial, the pre-trial judge denied that motion “so that the trial judge can hear the testimony and determine whether the expert’s opinions—which seem to set forth the whys and wherefores at least in their reports—were [legally] sufficient[ ] . . .” Because the pretrial judge was not going to be available for the entire trial, a different judge presided over the trial. After jury selection, the trial judge decided to revisit the court’s prior in limine ruling on the expert. Without taking testimony, he concluded the expert had rendered a net opinion and thus excluded the testimony. Because the defendant was left without an expert to support its case, the trial judge also entered an order dismissing the legal malpractice claim and the remainder of the lawsuit quickly settled.

The Appellate Division reversed. The appeals court first noted that the motion to strike the expert was “nothing more than a thinly veiled summary judgment motion” because it essentially was dispositive of the defendant’s claims. The court recognized that the notice provisions for summary judgment motions were meant to satisfy due process by giving parties an opportunity to be heard at a meaningful time and in a meaningful matter. In addition to failing to provide the 28-day notice required for summary judgment motions, the motion did not give the “one week in advance of trial” notice required for an in limine motion, leaving the defendant with no opportunity to present written opposition. And, because the trial judge had not ruled on the earlier summary judgment motions in the case, he did not have the defendants’ opposition to that motion.

The appeals court held that the trial court should not have granted a motion that was dispositive of the plaintiff’s claim without holding a hearing under Rule 104 of the New Jersey Rules of Evidence. The trial court had decided the motion in a way that was “fundamentally unfair” to the defendant. Fairness required the trial court have conducted a hearing before “barring an expert’s testimony based upon a report, particularly if doing so will be dispositive of a case, when the expert has not had the opportunity to explain his opinions through testimony.” Slip op. at 10. The court left it to the trial court’s discretion whether to conduct the hearing before or during the trial.

The importance of the Berman, Sauter decision is that trial counsel can no longer leave to the last minute in limine motions that seek to exclude expert testimony or any other evidence that could be dispositive of the lawsuit. If trial counsel believes that expert’s opinions are inadmissible, it must give sufficient notice to the court and its adversary—and the Appellate Division suggested that it might not be enough just to comply with the one week notice provision if the in limine motion would have the same effect as a summary judgment motion. Berman, Sauter will make trial judges more likely to order pre-trial hearings when an in limine motion seeks to preclude the expert’s opinions and virtually a certainty if such a motion is made without the expert having given deposition testimony explaining his or her opinions.

Hiring an Expert: What Are you Looking For in Foreclosure Litigation?

I have spent the last 7 years developing the narrative for an expert opinion that could be presented, believed and sustained in court. In writing to a probable new expert we will offer through the livinglies.store.com I summarized what attorneys should be looking for when they consult with an expert in structured finance (i.e., derivatives, securitization etc.).

Here  are some of the issues you want covered by the expert declaration and testimony in court. The basic rule of thumb is that the expert must have both the qualifications to testify as an expert and a persuasive narrative of why his conclusions are right. Without both, the testimony of the expert simply doesn’t matter and will be rejected.

If you are a proposed expert in structured finance, then here is what I would want to know, and what I think lawyers should ask, depending upon what fact pattern is present in each case.

One thing I need to know is whether you feel comfortable in talking about the ownership and balance of the loan.

In one example American Brokers Conduit was the payee on the note and mortgage. We alleged that they didn’t loan the money. Our narrative ran something like this: if you ask me for a loan, and I respond “Yes just sign this note and mortgage” AND THEN you sign the note and mortgage AND THEN I don’t give you a loan, ARE YOU PREPARED TO SAY THAT THE NOTE AND MORTGAGE WERE DEFECTIVE IN A BASIC WAY, TO WIT: THAT THE SIGNATURE ON THE NOTE AND MORTGAGE WAS PROCURED BY FRAUD OR MISTAKE AND THAT WITHOUT THE IDENTIFICATION OF THE REAL CREDITOR BOTH INSTRUMENTS ARE DEFECTIVE.

Would you, as a reasonable business person accept a note purporting to be a negotiable instrument under the UCC if you knew that the transferor neither funded the loan nor (if they purport to be a successor) paid for the assignment?

What is your opinion of your position if you found out after acceptance of the note and mortgage that there was doubt as to whether the obligation was funded or purchased for value? What would you do or suggest to a client in either of those positions — (1) knowledge [or “must have known] or (2) no knowledge [and later finding out that there is doubt as to funding and purchasing for value]?

Are you prepared to say that the fact that the borrower actually did receive money as a loan from another different party does not create a circumstance where the borrower is construed to convey any rights to anyone other than the source of funds or someone in actual privity with the lender — and that both note and mortgage are defective under normal recording statutes — and certainly not a commitment by the debtor to BOTH the source of the funds and the receiver of the signed promissory note and mortgage?

In the one case referred to above, the corporate representative conceded that ABC didn’t loan the money. He was unable to explain what was transferred by ABC to Regents and from Regents to 1st Nationwide and thence to CitiCorp by merger. He admitted that “Fannie Mae was the investor from the start.” You and I understand that neither Fannie and Freddie are lenders. They are guarantors and they serve as Master Trustee for hidden REMIC trusts. (Do you know or agree with that assertion?)

But the question is whether the note is actual “evidence of the debt” (the black letter definition of a promissory note when it contains a promise to pay) when the creditor is identified as a party who was not a lender. In the absence of disclosures of some representative capacity for an actual lender, are you prepared to testify that the note is unenforceable even if the debt is otherwise enforceable in relation to the actual source of funds?

Or would you say that it is not enforceable by the stated payee but it might still be evidence of the debt and evidence of the terms of repayment to the third party source? How does the marketplace treat such questions in valuing a note and mortgage?

The question is whether the expert actually believes and is willing to argue that these conclusions are true and correct.  The expert must earnestly believe these assertions to be true, logically and legally.
Is it acceptable to the prospective expert to see a result where the application of law and facts results in the homeowner getting his home free and clear — on the basis that the wrong party sued him or initiated foreclosure (in non judicial states), or that the notice of default, notice of acceleration, and statements of money due were wrong.
The approach is an attack on ownership and balance. The balance would be wrong, even if the ownership was established, if the payments were not applied properly. The payments include all payments received by the creditor.  That includes all servicer advances directly to trust beneficiaries, as well as insurance and loss sharing payments (i.e., from FDIC and others) paid and received on behalf of the investors directly or the trust beneficiaries.
Part of the reasoning here is that you really have an interesting problem. The Trust beneficiaries agreed to “loan” money to a REMIC trust in exchange for a complex formula of repayment under the indenture of the mortgage bond (contained in the Prospectus and Pooling and Servicing Agreement). Those terms are different than the terms signed by the homeowner.
So there are two agreements — the mortgage bond and the mortgage note. Different parties, new parties are in the PSA as insurers, servicers,servicer advances etc. all resulting in a DIFFERENT payment from an assortment of parties expected by the creditor —different than the one promised by the debtor whether you refer to the note as evidence of the debt or not.Add the complicating factor that without evidence that the Trust was ever funded (i.e., without evidence that the broker dealer sent the proceeds from the offering prospectus to the trust) how do we answer the basic contract question: was there a meeting of the minds? The expectations of the lender (investors) and the borrower (homeowner) are entirely different and the documents used are completely different.

How could the Trust have entered into any transaction for the origination or acquisition of loans without evidence of funding?

On what basis can the Trustee or servicer claim any authority if the Trust was not funded and was essentially ignored? Does the expert agree that avoiding or ignoring the trust means avoiding and  ignoring the prospectus AND the PSA, which contains the authority for ANYONE to act on behalf of the investors, who are no longer “trust beneficiaries” but just a group of investors without a vehicle for their investment?

ESSENTIAL QUESTION: Is the expert prepared to testify about this aspect of structured finance — i.e., how do you connect up the debtor and the creditor? As an expert you would be expected to be able to testify on exactly that question.

And finally there is testimony about the mortgage. If the mortgage secures the note (not the debt, necessarily), which is what is stated in the mortgage, then is the expert willing to testify that the mortgage was defective and should never have been recorded?

Would it not be true, in your estimation, that if a homeowner executes a mortgage in favor of a party posing as a lender, and that party is not a lender to the homeowner, that you could testify that the moment such a mortgage is recorded it probably clouds title?

Would you be willing to testify that based upon those facts, you would say that it is an unknown variable as to who to pay?

Would you be wiling to testify that if you don’t know who to pay, you have no basis for trusting a satisfaction of mortgage from any party including the the original mortgagee?

And lastly that if there is no basis on the face of the instruments or in recorded instruments to presume a valid creditor has been named, that no better presumptions would attach to any assignment, endorsement or other instrument of transfer?

For information concerning expert declarations, consultations and testimony from experts with appropriate credentials to be qualified as an expert, or for litigation support, please call 954-495-9867 or 520-405-1688.

Another Strategy to Own Your Loan: Allocation of Third Party Payments to Your Loan Account

I’m told by some industry insiders that you can buy a piece of our loan for pennies on the dollar, much the same as NPR did when they wanted to track the money and documents through the securitization structure. That’s a good goal because it will give you “inside information” on what the pretender lenders SAY happened to your loan.

But it doesn’t give you the real facts and events because the paperwork was prepared, executed and delivered long before the loans were originated. If a Judge thinks that you are nit-picking and that the issues you raise are issues between creditors, it is because he mistakenly presumes that the transaction started with the origination of the loan. In fact, the transaction commenced BEFORE the origination of the loan with the execution of the securitization documents, without which nobody would have any loans and nobody would have made any money.

By re-orienting the Judge to the point that the documentation for the origination of the loan was WITHIN THE CONTEXT, CONDITIONS AND PROVISIONS OF THE SECURITIZATION DOCUMENTS, you will (a) be telling the truth and (b) bringing the case closer to a result that are seeking — that without the pretender lender PROVING its case in a judicial proceeding, the election of non-judicial sale is unavailable.

One way to have the goods before your opposition has them is to buy, through a broker, a mortgage backed security that is based on a pool of assets and tranches, one of which is your own loan.

As an MBS owner you have every right to demand information about the rest of the owners and the status of the pool. One of the dirty little secrets is that a lot of pools have been closed out and dissolved which means that the party claiming to be the “trustee” for the SPV pool is claiming powers to represent an entity that no longer exists with investors who no longer are holders of MBS.

You can even ask whether any of the parties in the securitization chain or their agents, servants, employees, underwriters, affiliates ever received third party payments on “toxic” mortgages or mortgage backed securities or pools of assets in which a high percentage consists of loans that are non-performing, or on the representation that the receiver (usually the investment banking house or some subsidiary or affiliate).

As a holder of the mortgage backed securities you ask why the distribution reports did not include an allocation third party insurance, counterpart y or Federal money to your pool of assets and why the there was no allocation to individual loans in that pool. You can ask why they did not allocate those third party payments to the loans that were non-performing, which might include yours.

You can also ask whether such allocation to the pool and then to the individual loans in the pool and then to the nonperforming loans, has been applied to the obligation owed to the you as an investor. You should ask whether these third party payments are applied to the balance owed to you as an MBS owner, or whether it should be applied to payments that have been reduced or missed. And finally you should ask whether the third party payments would, if properly applied, make your payments, as an MBS owner, current or if they would still be behind. If behind, then how much behind and where did the rest of the money go? If ahead, then there is no longer any default to you as MBS owner.

Remember that the answer you are going to get (after stone-walling) is going to be a total of all such payments, since they never made any allocation. So your central question is how much did they get in third party payments and when. It is then up to you to decide on the proper with the help of an accountant familiar with generally accepted accounting principles.

You the  take the report of your accountant, your expert, and your forensic analyst and attach it to a pleading in which you “intervene” as the “real creditor” and state that the loan (a) was never in default because the MBS holders got their money that was due including a profit and/or (b) that the default was not in the amount as represented and that you, as creditor, would like to work out an arrangements with the debtor (you) in which you will (a) disclose the identity of the other creditors (b) disclose the true balance of the obligation after the above allocation (c) remove the predatory aspects of the loan, including the loss from appraisal fraud and (d) arrive at a thirty year fixed payment starting thirty days after the second closing at market rates for top tier debtors on the newly disclosed principal balance reduced by all relevant factors.

It’s all about transparency, truth ,justice and the American way.

TILA Statute of Limitations — No Limit

Editor’s Note: Judges are quick to jump on the TILA Statute of Limitations by imposing the one year rule for rescission and damages. But there is more to it than that.

First the statute does NOT cut off at one year except for items that are apparent on the face of the closing documentation; so for MOST claims arising under securitization where almost every real detail of the transaction was hidden and intentionally withheld, the one year rule does not apply.

Second, the statute of limitations does not BEGIN to run until the date that the violation is revealed. In most cases this will be when the homeowner knows or should have known that the loan was securitized. Since the pretender lenders are so strong on the point that securitization does not affect enforcement, the best point in time for the statute to run is when a forensic analyst or expert tells the homeowner that TILA violations exist.

And THEN, in those cases where the information was hidden, the statute of limitations is three years from the date the information was revealed.

So when you go after undisclosed fees, profits and other compensation of any kind, you are not cut off by one year because — by definition they were not disclosed. The only way the other side can get out of that is by admitting the existence of the fee, and then showing that it WAS disclosed — presumably through yet another fabricated document, signed by a non-existent person with non existent authroity with non- existent witnesses and notarized by someone three thousand miles away (whose notary stamp and forged signature was applied to hundreds of pages of blank documents for later use). [Brad Keiser was the one who discovered this tactic by doing what most forensic analysts don’t do — actually reading every piece of paper sent by the pretender lender and every piece of paper provided by the homeowner. Case law shows that where the notary was improperly applied — and there are many ways for it to be improperly applied, the notary is void. If the statute requires recording the document in the public records, then the document so notarized shall be considered as NOT being in the public records and is ordered expunged from those records].

This comment from Rob elaborates:

Regarding the TILA Statute of Limitations:

STATUTE OF LIMITATIONS
When a violation of TILA occurs, the one-year limitations period applicable to actions for statutory and actual damages begins to run. U.S.C. § 1641(e).
A TILA violation may occur at the consummation of the transaction between a creditor and its consumer if the transaction is made without the required disclosures.
A creditor may also violate TILA by engaging in fraudulent, misleading, and deceptive practices that conceal the TILA violation occurring at the time of closing. Often consumers do not discover any violation until after they have paid excessive charges imposed by their creditors. Consumers who later learn of the creditor’s TILA violations can allege an equitable tolling of the statute of limitations. When the consumer has an extended right to rescind or
pursue other statutory remedies because a violation occurs, the statute of limitations for all the damages the consumers seek extends to three years from the date the violation is revealed.
McIntosh v. Irwin Union Bank & Trust Co., 215 F.R.D. 26, 30 (D. Mass. 2003).

Discovery, Forensic Analysis and Motion Practice: The Prospectus

USE THIS AS A GUIDE FOR DISCOVERY, FORENSIC ANALYSIS AND MOTION PRACTICE TO COMPEL DISCLOSURE

see for this example SHARPS%20CDO%20II_16.08.07_9347

Comments in Red: THIS IS A PARTIAL ANNOTATION OF THE PROSPECTUS. IF YOU WANT A FULL ANNOTATION OF THIS PROSPECTUS OR ANY OTHER YOU NEED AN EXPERT IN SECURITIZATION TO DO IT. THERE ARE THREE OBVIOUS JURISDICTIONS RECITED HERE: CAYMAN ISLANDS, UNITED STATES (DELAWARE), AND IRELAND WITH MANY OTHER JURISDICTIONS RECITED AS WELL FOR PURPOSES OF THE OFFERING, ALL INDICATING THAT THE INVESTORS (CREDITORS) ARE SPREAD OUT ACROSS THE WORLD.

Note that the issuance of the bonds/notes are “non-recourse” which further corroborates the fact that the issuer (SPV/REMIC) is NOT the debtor, it is the homeowners who were funded out of the pool of money solicited from the investors, part of which was used to fund mortgages and a large part of which was kept by the investment bankers as “profit.”There is no language indicative that anyone other than the investors own the notes from homeowner/borrowers/debtors. Thus the investors are the creditors and the homeowners are the debtors. Without the investors there would have been no loan. Without the borrowers, there would would have been no investment. Hence, a SINGLE TRANSACTION.

If you read carefully you will see that there is Deutsch Bank as “initial purchaser” so that the notes (bonds) can be sold to pension funds, sovereign wealth funds etc. at a profit. This profit is the second tier of yield spread premium that no TILA audit I have ever seen has caught.

The amount of the “LEVEL 2” yield spread premium I compute on average to be approximately 30%-35% of the total loan amount that was funded FOR THE SUBJECT LOAN on average, depending upon the method of computation used.Thus a $300,000 loan would on average spawn two yield spread premiums, “level 1” being perhaps 2% or $6,000 and “level 2” being 33% or $100,000, neither of which were disclosed to the borrower, a violation of TILA.

The amount of the yield spread premium is a complex number based upon detailed information about the what actually took place in the sale of all the bonds and what actually took place in the sale of all the loan products to homeowners and what actually took place in the alleged transfer or assignment of “loans” into a master pool and what actually took place in the alleged transfer or assignment of “loans” into specific SPV pools and the alleged transfer or assignment of “loans” into specific tranches or classes within the SPV operating structure.

Here is the beginning of the prospectus with some of the annotations that are applicable:

Sharps CDO II Ltd., (obviously a name that doesn’t show up at the closing with the homeowner when they sign the promissory note, mortgage (or Deed of Trust and other documents. You want to ask for the name and contact information for the entity that issued the prospectus which is not necessarily the same company that issued the securities to the investors) an exempted company (you might ask for the identification of any companies that are declared as “exempted company” and their contact information to the extent that they issued any document or security relating to the subject loan) incorporated with limited liability you probably want to find out what liabilities are limited) under the laws of the Cayman Islands (ask for the identity of any foreign jurisdiction in which enabling documents were created, or under which jurisdiction is claimed or referred in the enabling documentation) (the “Issuer”) (Note that this is the “issuer” you don’t see don’t find about unless you ask for it), and Sharps CDO II Corp., (it would be wise to check with Delaware and get as much information about the names and addresses of the incorporators) a Delaware corporation (the “Co-Issuer” and together with the Issuer, the “Co-Issuers”), pursuant to an indenture (don’t confuse the prospectus with the indenture. The indenture is the actual terms of the bond issued just like the “terms of Note” specify the terms of the promissory note executed by the borrower/homeowner at closing) (the “Indenture”), among the Co-Issuers and The Bank of New York, as trustee (Note that BONY is identified “as trustee” but the usual language of “under the terms of that certain trust dated….etc” are absent. This is because there usually is NO TRUST AGREEMENT designated as such and NOT TRUST. In fact, as stated here it is merely an agreement between the co-issuers and BONY, which it means that far from being a trust it is more like the operating agreement of an LLC) (the “Trustee”), will issue up to U.S.$600,000,000 Class A-1 Senior Secured Floating Rate Notes Due 2046 (the “Class A-1 Notes”), U.S.$100,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2046 (the “Class A-2 Notes”), U.S.$60,000,000 Class A-3 Senior Secured Floating Rate
Notes Due 2046 (the “Class A-3 Notes” and, together with the Class A-1 Notes and the Class A-2 Notes, the “Class A Notes”), U.S.$82,000,000 Class B Senior Secured Floating Rate Notes Due 2046 (the “Class B Notes”), U.S.$52,000,000 Class C Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class C Notes”), U.S.$34,000,000 Class D-1 Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class D-1 Notes”) and U.S.$27,000,000 Class D-2 Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class D-2 Notes” and, together with the Class D-1 Notes, the “Class D Notes”). The Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are collectively referred to as the “Senior Notes.” The Class A-2 Notes, the Class A-3 Notes, the Class
B Notes, the Class C Notes and the Class D Notes and the Subordinated Notes (as defined below) are collectively referred to as the “Offered Notes.” Concurrently with the issuance of the Senior Notes, the Issuer will issue U.S.$27,000,000 Class D-2 Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class D-2 Notes” and, together with the Class D-1 Notes, the “Class D Notes pursuant to the Indenture and U.S.$45,000,000 Subordinated Notes due 2046 (the “Subordinated Notes”) pursuant to the Memorandum and Articles of Association of the Issuer (the “Issuer Charter”) and in accordance with a Deed of Covenant (“Deed of Covenant”) and a Fiscal Agency Agreement (the “Fiscal Agency Agreement”), among the Issuer, The Bank of New York, as Fiscal Agent (in such capacity, the “Fiscal Agent”) and the Trustee, as Note Registrar (in such capacity, the “Note Registrar”). The Senior Notes and the Subordinated Notes are collectively referred to as the “Notes.” Deutsche Bank Aktiengesellschaft (“Deutsche Bank”), New York Branch (“Deutsche Bank AG, New York Branch” and, in such capacity, the “TRS Counterparty”) will enter into a total return swap transaction (the “Total Return Swap”) with the Issuer pursuant to which it will be obligated to purchase (or cause to be purchased) the Class A-1 Notes issued from time to time by the Issuer under the circumstances described herein and therein. (cover continued on next page)

It is a condition to the issuance of the Notes on the Closing Date that the Class A-1 Notes be rated “Aaa” by Moody’s Investors Service, Inc. (“Moody’s”) and “AAA” by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s,” and together with Moody’s, the “Rating Agencies”), that the Class A-2 Notes be rated “Aaa” by Moody’s and “AAA” by Standard & Poor’s, that the Class A-3 Notes be rated “Aaa” by Moody’s and “AAA” by Standard & Poor’s, that the Class B Notes be rated at least “Aa2” by Moody’s and at least “AA” by Standard & Poor’s, that the Class C Notes be rated at least “A2” by Moody’s and at least “A” by Standard & Poor’s, that the Class D-1 Notes be rated “Baa1” by Moody’s and “BBB+” by Standard & Poor’s, that the Class D-2 Notes be rated “Baa3” by Moody’s and “BBB-” by Standard & Poor’s.
This Offering Circular constitutes the Prospectus (the “Prospectus”) for the purposes of Directive 2003/71/EC (the “Prospectus Directive”). Application has been made to the Irish Financial Services Regulatory Authority (the “Financial Regulator”) (you could ask for the identification and contact information of any financial regulator referred to in the offering circular, prospectus or other documents relating to the securitization of the subject loan), as competent authority under the Prospectus Directive for the Prospectus to be approved. Approval by the Financial Regulator relates only to the Senior Notes that are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes of the Directive 93/22/EEC or which are to be offered to the public in any Member State of the European Economic Area. Any foreign language text that is included within this document is for convenience purposes only and does not form part of the Prospectus.
Application has been made to the Irish Stock Exchange for the Senior Notes to be admitted to the Official List and to trading on its regulated market.
APPROVAL OF THE FINANCIAL REGULATOR RELATES ONLY TO THE SENIOR NOTES WHICH ARE TO BE ADMITTED TO TRADING ON THE REGULATED MARKET OF THE IRISH STOCK EXCHANGE OR OTHER REGULATED MARKETS FOR THE PURPOSES OF DIRECTIVE 93/22/EEC OR WHICH ARE TO BE OFFERED TO THE PUBLIC IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.
SEE “RISK FACTORS” IN THIS OFFERING CIRCULAR FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE NOTES. THE SENIOR NOTES ARE NON-RECOURSE OBLIGATIONS OF THE CO-ISSUER AND THE NOTES ARE LIMITED
RECOURSE OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE COLLATERAL DESCRIBED HEREIN.
THE NOTES DO NOT REPRESENT AN INTEREST IN OR OBLIGATIONS OF, AND ARE NOT INSURED OR GUARANTEED BY, THE TRUSTEE, DEUTSCHE BANK SECURITIES INC., DEUTSCHE BANK OR ANY OF THEIR RESPECTIVE AFFILIATES. Note that you have more than one trustee without any specific description of where one trustee ends and the other begins. It is classic obfuscation and musical chairs. NOTE ALSO THAT TRUSTEE DISCLAIMS ANY INTEREST IN THE BONDS BEING ISSUED [REFERRED TO AS “NOTES” JUST TO MAKE THINGS MORE CONFUSING].

Assignments to Non MERS Members Further Cloud Title

Your case should first be summarized by your securitization expert who relies upon the expert opinions of others as to underwriting, appraisal, mortgage brokers etc. Then those other experts come in. After that, the forensic analyst and homeowner come in to fill in the facts upon which the experts relied.

But you build your case in reverse of the order of presentation, starting with the homeowner, then the forensic analyst, then the sub-experts, and finally the securitization expert.

From: Tony Brown

Editor’s Note: I have not bothered to edit the following comment because for those of you who are attending the forensic workshop I wanted you to see how information is often presented. Here is clear evidence of (a) why a forensic analyst is essential and (b) why you need a method of presentation that gives the Judge a clear picture of the true nature of a securitized transaction.

The other lesson to be gleaned is that forensic analysts should stick to facts and expert witnesses should stick to opinions. Lawyers should stick to argument. Any overlap will result in a brutal cross examination that will, quite rightfully, draw blood.

I’m planning a workshop whose working name is Motion Practice and Discovery for late in May. You see there is method to our madness here notwithstanding our critics.

Your case should first be summarized by your securitization expert who relies upon the expert opinions of others as to underwriting, appraisal, mortgage brokers etc. Then those other experts come in. After that, the forensic analyst and homeowner come in to fill in the facts upon which the experts relied.

But you build your case in reverse of the order of presentation, starting with the homeowner, then the forensic analyst, then the sub-experts, and finally the securitization expert.

Mers was named nominee on the mortgage and filed at the Register Of Deeds in Greenville SC, supposedly according to a lost note affidavit the original lender RBMG sold the note and according to MERS servicer ID the loan was transferred off of the MERS system and MIN# deactivated because of a sale to a non-mers member in 2002. NO ASSIGNMENT WAS RECORDED.Now the new owner EMC sold the loan to Bear Stearns which deposited into the Asset Backed Securities which did an assignment/sell to JP MORGAN CHASE as trustee. Now there has been a foreclosure started on the loan in March 2009 by The Bank OF New York Mellon as successor trustee for JP MORGAN CHASE who claims to be the real party in interest and hold the note. By way Of an assignment which was recorded at the ROD after the LIS-PENDENS and after the filing of complaint.Here is more fraud because the assignment was from MERS on behalf of the original lender RBMG which is defunct and has been since 2005 to the THE BANK OF NEW YORK MELLON. MERS has no authority to do an assignment because the loan was transferred from them in 2002 and Mers was Longer the mortgagee as nominee of record.Now are you with me( no chain of title) the BANK OF NEW YORK MELLON produced in discovery to me an allonge RBMG to EMC along with the lost note affidavit. EMC showed an allonge to JP MORGAN CHASE which skipped BEAR STEARNS. BEAR STEARNS was the depositor into the securities. First let start with the allonges: according to the UCC an allonge is only used when there is NO ROOM ON THE ORIGINAL NOTE FOR ENDORSEMENT and must be firmly attached as to become a part of the note. AN ALLONGE cannot be used to transfer interest and is invalid if there is room on the note for endorsements and is invalid it not attached. A lost note and two allonges that were not signed and not dated and even skipped BEAR STEARNS that deposited it into the securities is the purported chain of title , now let’s look at the prospectus:Bear Stearns Asset Backed Securities Inc · 424B5 · Bear Stearns Asset Backed Certificates Series 2003-2 · On 6/30/03 Document 1 of 1 · 424B5 · Prospectus . Assignment of the Mortgage Loans; Repurchase At the time of issuance of the certificates, the depositor will cause the mortgage loans, together with all principal and interest due with respect to such mortgage loans after the cut-off date to be sold to the trust. The mortgage loans in each of the mortgage loan groups will be identified in a schedule appearing as an exhibit to the pooling and servicing agreement with each mortgage loan group separately identified. Such schedule will include information as to the principal balance of each mortgage loan as of the cut-off date, as well as information including, among other things, the mortgage rate,the borrower’s monthly payment and the maturity date of each mortgage note. In addition, the depositor will deposit with Wells Fargo Bank Minnesota, National Association, as custodian and agent for the trustee, the following documents with respect to each mortgage loan: (a) except with respect to a MOM loan, the original mortgage note, endorsed without recourse in the following form: “Pay to the order of JPMorgan Chase Bank, as S-40——————————————————————————– trustee for certificate-holders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2 without recourse,” with all intervening endorsements, to the extent available, showing a complete chain of endorsement from the originator to the seller or, if the original mortgage note is unavailable to the depositor, a photocopy thereof, if available, together with a lost note affidavit; (b) the original recorded mortgage or a photocopy thereof, and if the related mortgage loan is a MOM loan, noting the applicable mortgage identification number for that mortgage loan; (c) except with respect to a mortgage loan that is registered on the MERS(R) System, a duly executed assignment of the mortgage to “JPMorgan Chase Bank, as trustee for certificate-holders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2, without recourse;” in recordable form, as described in the pooling and servicing agreement; (d) originals or duplicates of all interim recorded assignments of such mortgage, if any and if available to the depositor; (e) the original or duplicate original lender’s title policy or, in the event such original title policy has not been received from the insurer, such original or duplicate original lender’s title policy shall be delivered within one year of the closing date or, in the event such original lender’s title policy is unavailable, a photocopy of such title policy or, in lieu thereof, a current lien search on the related property; and (f) the original or a copy of all available assumption, modification or substitution agreements, if any. In general, assignments of the mortgage loans provided to the custodian on behalf of the trustee will not be recorded in the appropriate public office for real property records, based upon an opinion of counsel to the effect that such recording is not required to protect the trustee’s interests in the mortgage loan against the claim of any subsequent transferee or any successor to or creditor of the depositor or the seller, or as to which the rating agencies advise that the omission to record therein will not affect their ratings of the offered certificates. In connection with the assignment of any mortgage loan that is registered on the MERS(R) System, the depositor will cause the MERS(R) System to indicate that those mortgage loans have been assigned by EMC to the depositor and by the depositor to the trustee by including (or deleting, in the case of repurchased mortgage loans) in the computer files (a) the code in the field which identifies the trustee and (b) the code in the field “Pool Field” which identifies the series of certificates issued. Neither the depositor nor the master servicer will alter these codes (except in the case of a repurchased mortgage loan). A “MOM loan” is any mortgage loan as to which, at origination, Mortgage Electronic Registration Systems, Inc. acts as mortgagee, solely as nominee for the originator of that mortgage loan and its successors and assigns. S-41——————————————————————————– The custodian on behalf of the trustee will perform a limited review of the mortgage loan documents on or prior to the closing date or in the case of any document permitted to be delivered after the closing date, promptly after the custodian’s receipt of such documents and will hold such documents in trust for the benefit of the holders of the certificates. In addition, the seller will make representations and warranties in the pooling and servicing agreement as of the cut-off date in respect of the mortgage loans. The depositor will file the pooling and servicing agreement containing such representations and warranties with the Securities and Exchange Commission in a report on Form 8-K following the closing date. After the closing date, if any document is found to be missing or defective in any material respect, or if a representation or warranty with respect to any mortgage loan is breached and such breach materially and adversely affects the interests of the holders of the certificates in such mortgage loan, the custodian, on behalf of the trustee, is required to notify the seller in writing. If the seller cannot or does not cure such omission,defect or breach within 90 days of its receipt of notice from the custodian, the seller is required to repurchase the related mortgage loan from the trust fund at a price equal to 100% of the stated principal balance thereof as of the date of repurchase plus accrued and unpaid interest thereon at the mortgage rate to the first day of the month following the month of repurchase. In addition, if the obligation to repurchase the related mortgage loan results from a breach of the seller’s representations regarding predatory lending, the seller will be obligated to pay any resulting costs and damages incurred by the trust. Rather than repurchase the mortgage loan as provided above, the seller may remove such mortgage loan from the trust fund and substitute in its place another mortgage loan of like characteristics; however, such substitution is only permitted within two years after the closing date. With respect to any repurchase or substitution of a mortgage loan that is not in default or as to which a default is not imminent, the trustee must have received a satisfactory opinion of counsel that such repurchase or substitution will not cause the trust fund to lose the status of its REMIC.

I’m not a MOM loan the loan transferred off of MERS, Mers no longer tracked the assignments and let’s not forget I HAVE IN MY POSSESSION THE ORIGINAL NOTE STAMPED FULLY PAID AND SATISFIED NEGOTIATED TO ME FROM RBMG. The note is date stamped MARCH 2002 and has been in my possession since 2004 along with a letter from the RBMG stating the loan is fully paid and satisfied address to me which is the declaratory letter.

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