As part of my consultation on a case involving PennyMac and Citi, I suggested a strategy (see below) using the procedural route of a Request for Admissions. If not answered, the requests are deemed admitted — which in most cases will completely undermine the foundation for any of the evidence proffered by the foreclosing party. If admitted, the same result applies. If denied, you have something to ask for in further discovery. If objections are filed then the lawyer must be prepared with cases, statutes and treatise authority to back up his claim that he/she is entitled to the information and that without it the trial will be a sham.
The usual response to a request for production is that they already gave you the paperwork — when you know and they know that isn’t what you were asking for. You hopefully asked for all documents in which there was an exchange of money for the subject debt, note and mortgage. Experience shows me that people who win on this point in court usually start getting good settlement offers — or the bank simply backs away and won’t return phone calls.
The foreclosing party will most likely claim privilege or otherwise try to obscure the issues with legal presumptions that since they have possession of the note, they are presumed to own the note or presumed to own the right to enforce. This flies in the face of the knowledge that the creditor is unknown to the foreclosing party and therefore the foreclosing party could have no contract or communication with the investors who own the debt.
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They are avoiding any hint that they have or that you are entitled to see any documents that actually show that a transaction occurred. A Motion to Compel and perhaps Request for Admissions could push them to the wall. In case you need to amend the request for production or send out another set, you might use the following as a potential guide. The Request for Admissions might include something like this:
1. Please admit that the named Plaintiff in this action did not participate in any transaction in which money or property was paid in exchange for ownership of the subject debt.
2. Please admit that the named Plaintiff in this action is relying solely on the documentation that has been produced as evidence of a transaction in which money or property was paid in exchange for ownership of the subject debt.
3. Please admit that the named Plaintiff in this action did not participate in any transaction in which money or property was paid in exchange for ownership of the subject note.
4. Please admit that the named Plaintiff in this action is relying solely on the documentation that has been produced as evidence of a transaction in which money or property was paid in exchange for ownership of the subject note.
5. Please admit that the named Plaintiff in this action did not participate in any transaction in which money or property was paid in exchange for ownership of the subject mortgage.
6. Please admit that the named Plaintiff in this action is relying solely on the documentation that has been produced as evidence of a transaction in which money or property was paid in exchange for ownership of the subject mortgage.
7. Please admit that the documentation previously produced as stated in Plaintiff’s response to Defendant’s Request for Production do not contain any reference to a transaction in which the subject debt, note and/or mortgage was purchased by payment of money or property for the subject debt, note and/or mortgage.
8. Please admit that one or more Citigroup entities claim an interest in the proceeds of the foreclosure of the subject debt, note or mortgage.
9. Please admit that Plaintiff has no knowledge of any kind as to the identity of a party that has or will suffer economic damages arising out of the nonpayment of the debt.
10. Please admit that Plaintiff has no knowledge of any kind as to the identity of a party that has or will suffer economic damages arising out of the nonpayment of instruments deriving their value from the subject debt.
11. Please admit that the Plaintiff has no risk of economic loss arising out of nonpayment of the debt.
12. Please admit that the Plaintiff has no current economic loss arising out of nonpayment of the debt.
13. Please admit that the Plaintiff has no expectation of economic loss arising out of nonpayment of the debt.
14. Please admit that Plaintiff claims servicing rights over the subject loan as a result of a written agreement between a CitiGroup entity and Plaintiff.
15. Please admit the existence of an investor who claims rights to monetary proceeds arising out of the subject debt, note or mortgage.
16. Please admit that Plaintiff has no knowledge of any kind as to the identity of a creditor that has or will suffer economic damages arising out of the nonpayment of instruments deriving their value from the subject debt.
17. Please admit that instruments whose value is derived from the proceeds of the subject debt, note or mortgage have been issued and sold.
18. Please admit that the Plaintiff has made no entry or posting on its general ledger or otherwise in its financial records that identifies the subject debt, note or mortgage as an asset of the Plaintiff.
19. Please admit that the Plaintiff has made no entry or posting on its general ledger or otherwise in its financial records posting liability for a reserve for default (or any reserve for economic loss) arising out of Plaintiff’s ownership of the subject debt, note or mortgage.
20. Please admit that Plaintiff’s claims for foreclosure are derived from its claims of ownership of the note and mortgage.
21. Please admit that Plaintiff does not own the subject debt.
If they deny, then you have something to ask for — in interrogatories or further requests to produce.
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