LPS Countersues With Limp Complaint Against Nevada

Jul 4, 2012

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Editor’s Note: After being named as a defendant is a suit brought by Nevada AG Masto, LPS figured the best defense is a good offense. This will undoubtedly backfire. The smart move for the banks and servicers has always been to allege nothing formally, and then “proffer” facts to the Judge that the Judge thinks are already true. This is called taking control of the narrative or story. In this case, LPS subject itself to scrutiny and allows for discovery which they most certainly will seek.

AG Masto outsourced the suit to a private law firm deputized by the state to prosecute. LPS complains that this is illegal or that it was done improperly. As any pilot knows from the military, you don;t get flack until you are over the target. These counter-shots demonstrate how the banks and servicers are starting to feel extremely vulnerable. This is a departure from prior strategy wherein the banks and servicers led the investigators down rabbit holes without actually saying anything of offering any actual evidence with proper foundation from a competent witness with personal knowledge.

So far, criminal charges have been brought against several notaries and two LPS officers. Masto is claiming widespread fraud involving mass document signing.

The problems with the documents are many and seem like low-hanging fruit, but borrowers are still losing their court battles because of the presumption that they did take the loan, they did default and that they did sign a note and mortgage that accurately described the financial part of transaction. When these borrowers get to court they are confronted with a Judge that hears their silence or active admissions that these facts are true.

Many of us were led down that rabbit hole, including myself. Theoretically the defective documents should be enough to defeat the foreclosure. But theory isn’t enough. A thorough understanding of BOTH the academic version of securitization and the actual facts as they occurred is required to get the Judge off dead center.

From origination to the last assignment into the “pool” none of the transactions actually were taking place. There was no financial transaction, there was no value received or payment and so there was no transaction at all. Writing up a document that says otherwise besides being fraudulent, forged fabricated and robo-signed, is just not enough for most judges to let the borrower win.

While the Judge a are wrong in their application of the law, they feel justified in ignoring the niceties of documents that have not been subject to tampering, forging and fabrication.

And they might not be wrong procedurally. If the borrower admits or fails to object to proffers of evidence in the record as to the existence of the financial transaction between the borrower and the “lender” at the origination of the document, and admits or fails to object to proffers of evidence that the assignments were for value or payment, then he pretty much is forced to admit and rule that the document defects are cured by the admissions of the borrower.

This particular problem is caused by the borrower and the borrower’s attorney. It is a rare circumstances that the Judge will sustain an objection after the answer has been heard, rare still that they will strike it from the record and even more rare, that they could wipe it out of their own memory of having heard it.

But if the borrower starts from the beginning denying the debt, denying the obligation, thus denying any possibility of default for a financial transaction that never existed, then the Judge is faced with a material fact in issue. Some Judges might still rubber stamp the foreclosure, but unless the borrower screws things up with explanations of why he denies the loan, etc. which gives the Judge room to rule on that basis of denial, the Judge will almost always be overturned on procedural grounds for rubber stamping a lawsuit where there were material factual issues in dispute.

Which brings us back to LPS and Masto. The LPS position is weak at best. But even more important is that they broadening the area of inquiry and allowing discovery into things that they certainly don’t want discovered in terms of fabrication of documents and recording documents with recitals and declarations that are patently untrue. The damn is cracking.

In order to simply deny those allegations you must do so without taking frivolous positions. That’s easy if you understand how to track the money. And that is why you should not walk into court with an independent report showing that neither the document trail nor the money trail follow the academic securitization trail that was intended.

You don’t need to be right. All you need is a reasonable basis for making the allegation or denying the allegation of the other party. The big mistake that most pro se litigants and many lawyers make is that they spill the beans in the first hearing giving the Judge multiple targets from which to choose a reason to deny any relief to the borrower.

LPS Countersues Nevada AG Masto