Using Legal Discovery to Fight Fraudulent Foreclosures

Disclaimer: This article is for educational purposes only. It is not legal advice. Always consult a licensed attorney for your specific case.

Stop the Shame, Start the Defense

Too many homeowners defending foreclosure cases carry guilt, doubt, or a sense of defeat. But here’s the truth: borrowers were not dealing with a traditional loan transaction. They were unknowingly issuing unregulated securities for the benefit of investment banks — who kept the profits, concealed the money trail, and left both borrowers and investors in the dark.

So let go of the shame. You are not “cheating” the banks. They’re not entitled to what they’re claiming. What matters is exposing the holes in their case and forcing them to actually prove their right to foreclose.

Why Judges Rule for Borrowers

Judges don’t rule for borrowers because they believe securitization is a scam. They rule for borrowers when the bank fails on proof. That’s where discovery comes in. Discovery is not busywork — it’s the single most important tool in foreclosure defense.

Every time you demand proof, compel discovery, or object at trial, you disrupt a carefully engineered scheme. The entire foreclosure machine depends on concealment. Your job is to reveal the gaps.

The Core Problem with Bank Claims

Banks present themselves — or a trustee for a trust — as the single claimant. But under securitization, ownership of the debt is diversified. By definition, no single entity owns the debt.

• Certificate holders don’t own the loans. They only have a promise of payment from the investment bank.

• Trustees rarely show evidence that the trust ever purchased the loan.

• Investment banks can’t admit ownership because they’ve already sold off the risk and the income streams.

This leaves foreclosure mills presenting a claim without a true claimant. That’s the hole discovery is designed to expose.

Keys to a Winning Strategy

1. Challenge the Foundation

   • In judicial states: file an answer with affirmative defenses such as lack of standing, recoupment, FDCPA violations, and quiet title.

   • In nonjudicial states: draft a complaint that denies each implied allegation in the notices of default, substitution of trustee, and sale.

2. Use Discovery Aggressively
   Don’t use boilerplate. Tailor your interrogatories, requests for admission, and document requests to the key issues:

   • Who owns the debt?

   • Was the loan ever purchased?

   • Who received payment, and when?

   • Where are the loan ledgers?

   • Who is the custodian of records?

   Use contention interrogatories:

   • “Do you contend that Plaintiff [US Bank as Trustee] is the legal owner of the debt?”

   • “Do you contend that the alleged trust paid value for the loan?”

   Force clear answers or evasions you can challenge.

3. Escalate When They Stonewall

   • File motions to compel when discovery is ignored.

   • Follow with motions for sanctions if noncompliance continues.

   • Use motions in limine to bar evidence at trial that was withheld in discovery.

   Even light sanctions create a record that undermines the bank’s credibility.

4. Preserve Objections at Trial
   Be ready to object to hearsay, lack of foundation, and missing business record exceptions. Many “slam-dunk” foreclosures have been stopped cold by well-placed objections.

5. Requests for Admission
   These can be powerful. If you later prove a fact the bank denied, you may be entitled to attorneys’ fees even if homeowners usually can’t recover fees in foreclosure cases.

The Real Goal

The path to victory isn’t proving the bank committed fraud in the broad sense — that’s nearly impossible without access to shadow banking records. The goal is to show the absence of proof: missing documents, evasive answers, false assumptions.

Judges are not looking to hand out “free houses.” But they will not allow sloppy, unsupported claims to move forward. When you show enough gaps in the case, the pressure builds, and many matters end in confidential settlements.

Final Thought

Discovery is not optional. It’s the battleground where most foreclosure cases are won or lost. If you don’t use it strategically, you’re giving the other side a free pass.

Be patient. Be persistent. Keep forcing the claimant to prove they exist and that they own the debt. More often than not, they can’t.