Kansas S Ct Decision Annotation 2: Reversing Default

The point must be made, and the evidence must be allowed, that the pretender lenders are gaming the system every day and literally stealing homes from both homeowners and investors who thought they had an interest in those homes when they bought mortgage backed securities. This leaves the borrower in a position of financial double jeopardy wherein the true owner of the loan can still make a claim and the investor is simply out of luck — usually have been misinformed about the payments or status of the pool of assets the investor bought into.

From Landmark v Kesler — see entire decision: kansas-supreme-court-sets-precedent-key-decision-confirming-livinglies-strategies

“6. It is appropriate for a trial court to consider evidence beyond the bare pleadings to determine whether it should set aside a default judgment. In a motion to set aside default, a trial court should consider a variety of factors to determine whether the defendant or would-be defendant had a meritorious defense, and the burden of establishing a meritorious defense rests with the moving party.
7. Relief under K.S.A. 60-255(b) is appropriate only upon a showing that if relief is granted the outcome of the suit may be different than if the entry of default or the default judgment is allowed to stand; the showing should underscore the potential injustice of allowing the case to be disposed of by default. In most cases the court will require the party in default to demonstrate a meritorious defense to the action as a prerequisite to vacating the default entry or judgment. The nature and extent of the showing that will be necessary lie within the trial court’s discretion.”

A highly important finding in this decision and affecting those whose homes have already been subject to a foreclosure sale, judgment or eviction (unlawful detainer) proceeding. In most cases these proceedings have resulted in actions taken by the parties upon the default of the alleged borrower. The default occurs when the borrower fails to answer in a judicial state or fails to file a lawsuit in a non-judicial state. The first time the matter comes before a court is when the foreclosing party files something in court — like an eviction action or petition for writ of possession. The mistake that courts are making at the trial court level is that they are treating the matter as though it has been judicially concluded, as if there was a hearing or trial where the parties were heard on the merits. This is simply not the case.

Judges must come to the realization that this is not the end of the matter — it is the beginning. And they should consider any motion directed to the merits of the would-be forecloser’s claim and the defenses of the homeowner. And unlike a motion to dismiss, where there will be plenty of time to consider factual matters later, the motion to set aside the sale, foreclosure judgment, notice of default, notice of sale, or judgment of unlawful detainer or eviction is a final determination of the merits — most often without hearing one shred of evidence offered or proffered by the homeowner. In fact, there are numerous cases where the trial judge abruptly and even rudely silenced the lawyer or pro se litigant saying that this was a simple matter of eviction (or whatever the motion was pending) and this is not an evidentiary hearing. Other Judges see the inherent unfairness and the denial of due process when the homeowner raises objections that the pretender lender had no right to foreclose, did so improperly and essentially stole the title abusing state process and creating a fraud upon the court and everyone else. But the application of this approach has been inconsistent and uneven.

While we have seen numerous cases turned on their head where a homeowner has been restored to possession of the house, and even clear title awarded to the homeowner thus blocking any future foreclosure, we have seen many other cases where Judges are still viewing these cases as dead beat borrowers trying to game the system.

The point must be made, and the evidence must be allowed, that the pretender lenders are gaming the system every day and literally stealing homes from both homeowners and investors who thought they had an interest in those homes when they bought mortgage backed securities. This leaves the borrower in a position of financial double jeopardy wherein the true owner of the loan can still make a claim and the investor is simply out of luck — usually have been misinformed about the payments or status of the pool of assets the investor bought into.

“How do I prove that?” is the usual question. You don’t prove it you ask it. After performing a forensic review, hopefully by an independent expert, you present allegations and evidence that upon the best information you have, you believe the loan was securitized and that the owner of the loan is not the party who brought the action. You offer further your belief that the loan might have been paid or transferred by reason of federal bailout or insurance or credit default swaps, and that this pretender lender refuses to answer the questions put to them in the qualified written request and debt validation letter.

Since the QWR and DVL are statutory letters giving rise to an obligation to answer and resolve the issue, and the pretender lender is already in violation, the only answer the pretender lender could have to avoid sanction for failing to conform to statute is to say they are not a lender and therefore they don’t have any obligation to answer. This of course knocks them out of the position of would-be forecloser. If the pretender lender simply fails to comply, then your position is that no creditor can seek to collect on a debt without proving the debt is due. Since you have asked for a full accounting of the chain of title on the loan and the money received from all parties, not just the borrower, it is impossible to state how much of the obligation is due and to whom it is owed.

Thus the answer is that you allege the facts, you present probable cause (forensic review) for your allegations and then enter the discovery phase in which you press the pretender lender into eventually taking the position that they don’t need care, custody or control over the note or loan. They will take the position that they have the bare right to enforce the note and mortgage with or without the proper documentation. Most judges won’t buy that.

By the way, a simple and deadly question to ask the pretender lender in litigation is whether they have complete decision-making authority to modify the loan. You’ll be killing several birds with one stone when answer or refuse to answer that question — especially in California where there is an obligation on the part of the lender to have a modification program in place. The current programs in place are from servicers, not lenders.

Tags: borrower, disclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, lost note, predatory lending, quiet title, securitization, trustee
Posted in bubble, Corruption, Eviction, Modification, securities fraud, Servicer |