Things that Should be Added to Affidavits and Expert Opinion Letters, Reports, and Declarations

What’s the Next Step? Consult with Neil Garfield

CHECK OUT OUR NOVEMBER SPECIAL

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s comment: First let me emphasize the need to consult with competent legal counsel who is licensed in the jurisdiction in which your property is located. Second, let me emphasize that unless you have an “expert” who actually has credentials including experience, academic degrees, authorship of published books etc., the evidence from the expert might be allowed but it will most certainly be ignored.

In answering an email recently is edited some passages that I realized should probably be available for everyone to see whether they are lawyers, auditors, analysts, paralegals or homeowners.

Also as a caveat this field is evolving every time the banks move the goal posts. But for now, I think the wording below, if properly defended by someone who is coached well as an expert witness, will get traction more often than not at the preliminary stages of motion practice. And remember this wording is only an abstract from a much larger document:

“We could find no evidence supplied by the “lender” that shows that a payment or value of any kind was transferred to anyone in connection with the funding or purchase of the subject loan. In my experience normal practice in the industry would be to provide such information along with the documentation, or the documentation would be considered incomplete and would not be accepted by a title company or a bank that was refinancing a property. In those case where the proof of payment is excluded it is standard practice in the industry to supply same upon request. Such request was made and the foreclosing parties have ignored the request. This indicates, in my opinion, that the loan was purchased or funded by third parties in an table funded loan which is predatory (illegal) per se according to the the Federal Truth in Lending Act and Reg Z).

The significance of the above statement is that (a) the mortgage or deed of trust supposedly collateralizing the property was never perfected and is therefore unenforceable and (b) that none of the foreclosing parties is a
“creditor” within the meaning of applicable state statutes and therefore cannot submit a credit bid in lieu of cash, should the property be subject to an auction. But it would also indicate that any Notices of Default, Notices of Sale, substitutions of parties or trustees would be ineffective (the equivalent of wild deeds out of the chain of title) since the foreclosing parties could not be considered creditors, beneficiaries, assignees or lenders.

The facts in this case strongly indicate that the wrong payee was named on the note, the wrong “lender” was named on the note and mortgage, and the terms of repayment on the note were incomplete in that they failed to refer to the Master Servicer, and the indenture to the mortgage bonds that were sold to raise the capital to fun mortgages and fees — fees that were both disclosed and undisclosed. Undisclosed fees are required to be be credited or repaid to the borrower. Those fees include any sort of compensation to any party, disclosed or not, whose compensation or profit resulted from the apparent closing of the loan.

Hence the amount due or claimed by the collection letters and notices are are incorrect, if there were such fees and compensation. Based upon common practices in the industry such fees that would be ordinarily generated by transaction identical to the subject loan would include a tier 2 yield spread premium, and other transfer or servicing fees that did not appear on the borrowers disclosure statements nor on the HUD 1 settlement statement.

In addition, the accounting provided to the borrower and my office is incomplete in that the only accounting provided relates to direct transactions between the subservicer and the borrower and does not include the transactions between the Master Servicer  and all sources of payments or fees from the co-obligors including not bot limited to the subservicer, insurance payments, guarantees, proceeds from hedge instruments designed to protect the investors but yet allocated to the investor, and Federal bailouts. These payments received by the investment bank or its affiliates acting as Master Servicer (agent for the principal REMIC or its investors who purchased mortgage bonds) would most likely have occurred in this case following current industry practices.

The effect of receipt of money by agents of the REMIC or investors is to reduce the balance owed to the investor. If the payment was made to purchase the loan or bond then the purchaser would be the correct party to demand collection. If the payment was made without purchase of the subject loan or bond, then the payor would possibly have an action in contribution but it is doubtful that the action in contribution would be secured under the most favorable of circumstances, thus eliminating foreclosure as an option in collection. And if the payment was made with express waiver of subrogation, then the balance due to the REMIC or investor is reduced without any right of claim against the borrower, thus extinguishing the obligation, note and mortgage — to the extent of the payment.

As a general rule the banking industry has reported such fees, payments, profits and compensation as their own and has neither paid or disclosed the receipt of money to the investors who as a group constitute the principal in a principal agent relationship.

Hence, the obligation due on the books of the REMIC or investors remains unchanged despite the receipt of actual monetary payments by their agent. This in turn requires an accounting from the Master Servicer, Investment Banker and affiliates as to the nature of payments received and a determination by the court as to how those payments should be allocated.

The significance is again that the amount demanded might be far in excess of the actual debt due to the real creditors, thus nullifying the effect of collection procedures, notices and other actions undertaken by the putative “lender” who, as aforesaid, is not a creditor. The effect of this practice is to collect more than once on the same debt, obligation, note and or mortgage.

Tags: accounting from Maser Servicer, allocation of payments, amount demanded, co-obligors, insurance. hedge instruments, lawsuit against Investment Bank, Master Servicer accounting, subservicer
Posted in bubble, Corruption, Eviction, securities fraud |