There is a great deal of conflict and confusion in the world of foreclosure defense about the prospect of modification. It is obvious that approvals are random only to create the impression that an entire system devoted to foreclosing on as many homes as possible is purportedly attempting to work with homeowners.
We all know that we are dealing with entities who have no right, title or interest to the loans or the servicing or the administration of them. Yet we are presented with a crazy hodgepodge of demands for paperwork so that the unauthorized servicer can “consider” and “get approval” from the “investor.”
If the terms are favorable to the homeowners, many homeowners are advised by me and others to accept the modification even though we know that we are not settling with anyone who has the right or authority to bring the claim, much less settle it. But the process of settlement/modification brings with it some potential opportunities to drill home your primary defense narrative.
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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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Tens of thousands of homeowners have reported to us that they are in conflict with their own attorneys about how to proceed — litigation or modification. This article is meant to convey the complexity of strategic legal decisions. Your attorney has not been bought off by the other side. Suggesting settlement is not a betrayal. It is called doing the job of a lawyer. The justice system runs on money. If you want all out war, then you must pay for it. If you can’t or won’t pay for it, then you must accept the probability of achieving less than your main goal.
Unless you are wiling to spend large amounts of money on fees such that the attorney is being paid to do all the research, all the analysis and all the strategic planning required to litigate, then you must accept the consequences of limited strategies in place of strategies that are designed to win the case. But modification represents a backdoor to beating your opposition using the same defense narrative as you are presently using in litigation.
We should not be annoyed with local counsel. We defer to local counsel always. This is not a contest. If local counsel deems it best that the homeowner settle then it should at least be pursued, but in the end it is the homeowner who decides what to accept.
The findings in the
TERA report can be used as a reason to demand that the named Trustee of the named Trust acknowledge a settlement and the authority of whoever is negotiating the settlement.
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When the intermediary “servicers” refuse to present any signature from any officer of the purported “Trustee” of a purported “Trust” that owns the subject debt, the homeowner can go to court. This time the homeowner is armed with inequitable conduct by purported agents of the purported Plaintiff or foreclosing party.
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In court, the homeowner would say the purported “servicer” has proposed a settlement/modification that the homeowner has already accepted; but now the “servicer” refuses to have the Plaintiff (foreclosing party) execute any document memorializing the settlement/modification. Instead they are requiring acceptance of a signature from a person of unknown authority on behalf of a self-proclaimed servicer of unknown authority.
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Reports from forensic experts show that none of the parties have any right, title or interest in the debt or servicing; however homeowner is willing to accept the risks of dealing with an unauthorized entity, as long as the named Trustee executes the settlement on behalf of the Plaintiff Trust.
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A close examination of the proposed modification document will usually show that the creditor is being subtly changed. Payments are now owed to the servicer and there is no mention that the servicer is accepting those payments on behalf of the named creditor who is named as the foreclosing party. At best the creditor is being changed from the foreclosing trust to unknown. At worst the debt is being joined with the note and mortgage and changed to being presumptively owned by parties who, to the detriment of the owners of the debt, have never paid for ownership.
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The defending homeowner would be saying that the intermediary with whom she has been corresponding is acting in bad faith and/or without authority. He/She would be seeking relief in the form of a court order requiring an officer of the named Trustee Bank, as trustee for the named Trustee appearing as the Plaintiff and foreclosing party to either sign the deal or reject it if the current servicer had no authority to offer it.
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This is akin to cases in which there is a settlement and the attorney executes documentation or a pleading; the court most often rejects the “acceptance” by the attorney even though he/she is an officer of the court. The court, especially in foreclosures, will almost always require the signature of the homeowner. What is good for the goose is good for the gander.
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The purpose of going through all that is to force the other side to offer a better deal or back away. I can virtually guarantee that the “Trustee” for the “REMIC Trust” will NOT sign a document in which they admit to being a player. The way it is set up now, the “Trustee’s” name is falsely used and the bank named as Trustee can claim plausible deniability in any given case in the event that the situation explodes and there is liability for false claims. In all likelihood the Trustee doesn’t even have a retainer agreement with the law firm that is falsely reporting that they are representing a nonexistent client Trust.
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Using this strategy drives the opposition to the wall. They know that the “Trustee” has no authority or interest in the litigation. They know the Trust is empty and most likely nonexistent. They know that without the subject loan being entrusted to a trust, no amount of writing can authorize the administration of the loan on behalf of the trust. They know there is potential liability for sanctions and punitive damages that could reach into the millions, but more importantly reach the press where homeowners will get the idea that maybe they can and ought to win.
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In my experience, the end result is usually a vast reduction in the amount demanded that is so steep that the homeowner feels constrained to accept it in exchange for accepting the risk that the parties with whom he/she is doing business have no right, title or interest in the loan.
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If the opposition were to produce a newly fabricated document the homeowner’s position strengthens. First the homeowner can seek to confirm the execution of the document by named “Trustee, on behalf of the named ‘Trust'”. Second the existence of a newly executed document may be used to argue that there was no privity or authorization before.
Tags: BONY, BoNY-MELLON, modification, servicer
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