APPROACHING A RESISTANT JUDGE

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Connecticut is one of the last states to confront the deluge of foreclosures so they are behind the curve. The usual evolution is that pro se litigants and lawyers who have little experience in litigating, much less litigating securitized loans, present arguments that immediately run against the grain of the sitting Judge. They use buzz words rather than arguments and attempt to win their case in the first hearing rather then get the case to the next stage. What is important is to couch arguments in the context of language and concepts that the Judge does understand and show where this foreclosure diverges from the usual foreclosure.

The biggest mistake is telling the Judge something that implies that the homeowner is looking for a free house and is just trying to take advantage of the obvious paperwork problems to get out of a debt that should be paid. The objective should be simply to get to the merits of THEIR foreclosure and require that they plead and prove the facts required as elements of a judicial foreclosure — with admonition that nobody should be able to use expedited foreclosure rules if they cannot prove up their case with a proper accounting and the right paperwork.

I usually tell lawyers to say out loud what the Judge is already thinking. That the usual perception is that borrowers are merely trying to use technicalities to get out of legitimate debt. What YOU are litigating is whether this would-be forecloser is the right party to foreclose, whether they have the standing and status to submit a credit bid at auction and whether they have correctly stated the amount due.

The other mistake that is too often made is to concede the default of the borrower. The pretender lenders have a strategy that focuses the attention of the Judge on the words and concept that the borrower hasn’t made a payment in X months. Thus the default is assumed by BOTH sides and the only question left is procedural as to when and where the sale will take place. But the usual pooling and servicing agreement provides for payments to the creditor by third parties who expressly waive any interest in the loan, note, mortgage or obligation.

Thus the borrower may still owe money to the creditor, but it less than the amount demanded in the foreclosure, AND if the servicer is making payments, then there is no default with the creditor, thus the foreclosure is inappropriate. If the payor (other than the borrower has a claim against the borrower) it is based in some other cause of action and not subject to foreclosure because they are neither on the note or mortgage. They have an unsecured claim.

In that scenario both the servicer or other third party (credit default swap counterparty or insurer) AND the creditor have claims against the borrower. The creditor may be secured, but the payor/claimant is not secured and unable to foreclose without first getting a judicial judgment, recording it as lien and enforcing it as any other civil judgment. If the Court insists on treating it as all one debt, then the Court must also direct the parties as to who may submit a credit bid at auction and in what amount. This would lead to the novel result of adding creditors to the note and mortgage based upon conduct rather than proper documentation.

The litigation is intended to clarify the amount due to the creditor because without the identity of the creditor and the calculating the actual amount due to the creditor under the mortgage loan, the borrower has no way of knowing the appropriate offer to modify under HAMP. Thus the possibility for settlement is completed blocked.

Thus the borrower is seeking a FULL accounting of all payments received by the creditor, with full knowledge that he might also have a different liability to third party payors — if they are allowed to pursue those claims despite their waiver of subrogation or claims against the homeowner.

To allow the would-be forecloser the right to foreclose on the entire amount is to reward a fraudulent creditor with more money than is due to the creditor and potentially even a double payments, leaving the borrower with both no chance to settle and owing more than the contract amount as stated in the loan documents. This is why we recommend that the borrower secure as much information as possible to counteract the representations proffered by counsel for the forecloser. The borrower should immediately object to such representations in that they are offered without reference to anything in the record (especially the default).

The use of the COMBO (see above) title and securitization report is a first step. The borrower’s attorney objects to the proffers and presumptions offered by the opposing side and says that neither side should be allowed to proffer representations instead of evidence. Then he holds up our report and says we have evidence there is no default and he would would want to proffer in an evidential hearing that will show that the creditor(s) are other than the the forecloser and that the amount demanded is incorrect.

None of these cases are decided in trial. A skilled lawyer approaches these cases as a ground war, and ultimately wins when he gets a Judge, now annoyed with the stone-walling tactics of the other side, to enter an order requiring the answering of interrogatories, the production of documents and the production of competent witnesses with personal knowledge at deposition. At that point, it appears to me that virtually all cases settle under seal of confidentiality on terms that homeowners consider favorable.

Adding claims for appraisal fraud, slander of title and quiet title, as well as the many other causes of action reported on this blog, broadens the potential scope of discovery — including, most importantly following the actual money trail and not just the documentary trail which contains recitations of transactions that were never completed or never occurred.

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |