FOLLOWING THE MONEY — WHAT TO ASK FOR AND LOOK FOR

MANY THANKS TO DAN EDSTROM

Dan has put together a list which frankly I would like him to expand. Following the money means determining the party to whom you MIGHT owe money. It certainly isn’t the pretender lender and if you can fill in the blanks on this list you will be able to show that. Remember the burden is NOT on you to prove it, the burden is on you to ASK for it in qualified written request, debt validation letter and/or discovery (interrogatories, request to produce, subpoena duces tecum, and requests for admission). If you ever get someone the pretender lender offers to answer your questions at deposition make sure you specify that you will want the person(s) who are able to answer questions about the following items on this list.

Your forensic review can only estimate the some of the data. But the closer you get to answering more and more of these questions by aggressively enforcing their obligation to answer under federal law, state law and rules of civil procedure, the closer you get to proving that the wrong party is servicing the loan, the wrong party is collecting on the loan, and the wrong party is enforcing the note, while the obligation has been altered by events outside of the report that the foreclosing party is reporting to the court. Each time they fail to give you the right person or the information leading to the names of the investors/lenders, the amount still owed on the obligation (not the note), you will get the judge increasingly interested as to why they can’t come up with information they should have had when they started foreclosure. Remember this is not about getting a free house — it is about getting answers to your questions. You might end up with a free house as others have done or you might end up with a re-structured loan on terms you can afford. One thing is sure — when you DO have all the answers, the amount due is bound to be far different than the amount they are claiming.

Laymen will be confused by my distinction between the obligation and the note. Under law, the note is only evidence of the obligation and is often confused, even in court, with the obligation itself. It is that confusion that the pretender lender are leveraging so they can keep everyone’s eye off the ball — the true amount of the obligation, not the indisputable amount written on the note. By distracting the Judge into looking only at the note, they finesse the proof requirement as to what is really owed. The fact that the real lender has been paid or settled through federal bailout, insurance, credit default swaps etc., is kept off the table as long as you fall into the trap of looking at the note (merely evidence of the obligation) instead of looking at the entire transaction through the lens of the creation and payment of the obligation from all potential sources.

ITEMS TO DEMAND IN ACCOUNTING FOR THE OBLIGATION:

– Original face value
– Beginning Notional / Principal balance
– Pass-through rate
– Principal distribution
– Interest distribution
– Total Distribution
– Principal loss
– Interest loss
– Deferred Interest
– Ending Notional principal balance

– The accrual period
– Acrrual methodology
– Optimal Interest Amount
– Interest loss
– Deferred Interest
– Interest shortfall amt
– Other income
– Accrued certificate interest remaining unpaid

Other income detail:
– Certificate class
– Prepayment charge
– Remaining excess cash flow and OC release amount
– other income distribution

Interest shortfalls, compensation and expenses (per Group)
– Current prepayment interest shortfall amt
– Compensating interest
– net prepayment interest shortfall amount
– Civil Relief act shortfall count
– civil relief act shortfall amount
– Compensation
– – subservicer
– – master servicer
Advances by master servicer
– Allowable expenses per governing document
– non-recoverable advances

Prepayment interest and Basis risk/net WAC shortfall amount (by certificate class)
– [I will leave out this section)

Collateral summary
LOAN COUNT AND BALANCE (by group)
– original laon count / scheduled principal balance
– beginning loan count / scheduled principal balance
– scheduled principal
– curtailment
– payoff
– matured loans
– repurchases (by the way this is 0 for all months reported)
– beginning aggregate scheduled principal balance of liquidations (and?) charge-offs
– ending loan count scheduled principal balance

there is more, but I will just leave it at that. None of the information is specific to any one loan as I had hoped. But, they have to keep that info somewhere (use discovery) …

Thanks,
Dan Edstrom

Tags: accounting, audit, borrower, disclosure, Eviction, foreclosure, foreclosure defense, foreclosure offense, forensic review, fraud, lender, Lender Liability, mortgage note, securitization, servicer, servicing agent, TILA audit
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