Judgment for Borrower: Winning Foreclosure Cases By Challenging Presumptions

Apr 10, 2015

For further information please call 954-495-9867 or 520-405-1688

Patrick Giunta, Esq. will be the guest on the Neil Garfield Show next Thursday, 6pm EDT.

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See Final Judgment: PURSGLOVE FINAL JUDGMENT DOC031715-001

See Transcript of Judge’s Order: Pursglove – Excerpt of Trial Transcript

Besides rescission, there are many other heavy duty weapons available to borrowers when it comes to defending foreclosure cases. The assumption that the party named as Plaintiff even knows of the existence of the foreclosure is false. The assumption that there ever was a transaction in which the Plaintiff EVER acquired the loan, the note or the mortgage is false. And the assumption that the “servicer” is the party authorized to manage the loan is false — because they are the agent of a Trust that does not own the loan, note or mortgage. And the assumption that the foreclosing party actually knows the balance due from the borrower is false. And the assumption that there is a default is usually false — especially when you see the balance continue to go down in monthly statements sent after the borrower stops paying (obviously from servicer advances).

While each case varies on the facts, this case is instructive on winning a foreclosure case where claims of securitization are involved. The Banks simply cannot win if they are actually required to prove the facts that they are attempting to get the court to presume. The attorneys of record for the homeowners were Patrick Giunta and myself. Further proceedings are expected for the recovery of costs and other matters. Patrick and I litigate some cases directly and we provide litigation support for cases across the country for lawyers who are litigating foreclosures, many times in hostile judicial climates.

As I have stated in hundreds of articles, these cases are winnable on one or more of several grounds — ownership, authority, balances and default. In this case it helped that Chase had sent out a notice of default the same day they processed a current payment from the homeowner. If the loan was truly owned by the Trust or the Trustee for the Trust, if the default had actually happened, and the servicing had been done properly, there would have been no need to slip SPS (Select Portfolio Servicing, owned by Credit Suisse) and its “boarding” process in to avoid embarrassing questions. In this case the attempt to bull doze the court with a cloud of paper didn’t work. They had to show real facts and they couldn’t. They couldn’t show real facts because the real facts contradicted their position as owner and servicer.

This is one of those moments that makes the struggle worthwhile. The case named the Plaintiff as US Bank “as trustee” for either a trust or certificate holders. As usual, no witness actually appeared for the Trust, the Trustee or the former “servicer.” There was no credible evidence showing US Bank was the Trustee. The Pooling and Servicing agreement said that Chase was the servicer but the Court found that the cutoff date could not have been satisfied. Hence the Trust was being falsely presented as the owner of a loan that it couldn’t possibly own by the terms of the Pooling and Servicing Agreement (PSA). Hence Chase was not the legal servicer of the loan and neither was SPS who produced various Powers of Attorney, endorsements that were obviously backdated etc. none of which gave them any more power than Chase had.

The Court found that the “boarding process” was evidence that could be admitted but then concluded that the boarding process was unreliable, and essentially untrustworthy and not credible. The witness for SPS was found to be credible — but not his testimony — because the information he had was insufficient to justify the claim of default and any claims about the balance. And the Court found that Chase had played with the escrow accounting and it was obvious that if anything, the homeowners had not only paid, but had quite probably overpaid the account.

This most likely applies to whoever it was that could be identified as Plaintiff — The Trust, the Holders of Certificates, US Bank, SPS (Specialized Loan Services), Chase, JP Morgan Chase Acquisition Corp., JP Morgan Chase, N.A. etc.

The suit was brought to enforce contractual rights contained in the note and mortgage introduced as Plaintiff’s exhibits.

The Court found there was no basis for Chase or SPS to “service” the loan account, collect any payments, maintain an escrow, make any disbursements except as a volunteer, or enforce the debt, note or mortgage. [This sets the stage for a lawsuit for disgorgement of money paid — pretty much the same thing as TILA rescission]

Plaintiff’s counsel announced that they were dropping their claims for anything other than principal and interest — thus dropping any claim for escrow for taxes and insurance, late charges, advances, fees, etc. There was a good reason for this — Chase had been using the escrow account as a slush fund.

SPS was unable to establish that it had the authority to service the Loan account. The Court found they did not have that authority.

SPS was unable to establish that they had the authority to “represent” the Trust, US Bank, or the holders of certificates.

No corporate representative of US Bank appeared. The SPS representative had no knowledge of any books, records or business of the Trust or Trustee. The lawyers were trying to snow the Judge. By diverting attention to the allegation of default, they were attempting to get the Judge to ignore the fact that the borrower didn’t owe these people any money and that previous collections were unauthorized.

No corporate representative of Chase Bank the alleged former servicer appeared.

No corporate representative of JP Morgan Chase Acquisition Trust Corp appeared, nor did the court receive any evidence or proffer as to the existence of such an entity. But it appeared nonetheless in the document trail.

Plaintiff during the latter part of litigation chose to style the case naming as Plaintiff US Bank, NA as Trustee for the holders of the certificates issued by a trust. No certificates were produced, nor any authority for the holders to collect or enforce the alleged debt, and no authority was presented to the court as to the right of the holders of those certificates to pursue foreclosure.

The evidence included as unsigned Pooling and Servicing agreement which included a cut-off date of November 16, 2006 for the loan to have been acquired by a trust through purchase of the debt from JP Morgan Acquisition Corp. The evidence did not include any evidence of a transaction in which the Trust actually purchased the loan for value, much less that such a transaction was completed before the cutoff date. The PSA was relied upon by the Plaintiffs as authority for filing the foreclosure. The Court found that none of the parties variously identified as Plaintiffs or representing the Plaintiffs ever acquired the debt, note or mortgage.

The evidence regarding transfer documents for the loan was not credible. The court found that the debt was not acquired and that neither the note nor the mortgage was acquired by the Trust, Holders of certificates, or JP Morgan Acquisition Trust before the lawsuit was filed. The documents appear to have been backdated because the copy of the note attached to the complaint was clearly different than the note with various endorsements (one stamped VOID) that was introduced at trial.

The Plaintiff failed to establish a credible default date. The court finds that the default letter dated November 3, 2008 was wrong as to the existence of a default, wrong as to the date of the alleged default and clearly wrong as to the amount required for reinstatement. The Court further found that the witness for Plaintiff, while credible, did not have adequate information to answer the simplest questions about the loan account.

While the “Boarding Process” was initially presumed to be adequate to establish the records of the “prior servicer” (Chase Bank), continued attacks in cross examination (and questions from the Bench) later proved the Boarding process and the therefore the previous records of the “servicer” Chase to be not trustworthy or credible — with testimony about “default dates” of July 1, August 1, September 1, October 1 (all 2008) unexplained. In the end there was no default date.

The Court noted that after preparing for multiple trial dates, the sole witness for the Plaintiff could not answer the question posed by the Court: When was the default date? The Court noted that it had taken eleven minutes for the witness, who was still analyzing the report generated by Chase the previous servicer, whose records had been “boarded” by Select Portfolio Servicing claiming to be the successor to the servicing rights on the alleged loan. During that period the witness gave three different dates for default and gave 4 different dates for the last credit to the borrower’s account. The last date conformed with the testimony of the Defendant’s sole witness who said that her last payment was in November, 2008 on the same day that Chase records showed processing for that payment which was the same date that Chase sent out the default letter.

The amount demanded for “reinstatement” in the default letter was clearly wrong and could not be explained by Plaintiffs. Regardless of which figure was used in the default letter dated November 3, 2008, none of the amounts could be reconciled with even common sense. The letter says the the default occurred as of the payment due for October 1, 2008, and yet the Plaintiff admitted receiving two payments — one for October and one for November between October 1, 2008 and November 3, the same day that the default letter was sent out (only 34 days after the alleged “default”).

The Court found the default letter was wrongly prepared even if it was sent to the Defendants, which was doubtful. There was no evidence of mailing the default letter. Hence the conditions precedent in paragraph 22 of the mortgage were not satisfied by Plaintiff or any related parties prior to suit being filed. None these, Plaintiffs or their representatives (Chase) had the right to elect to accelerate the entire debt due as stated on the note and mortgage. The Court found that the acceleration and the default letter were wrongfully prepared and that the foreclosure of the mortgage was accordingly wrong.

The Chase records on handling of the escrow payments, the reversal for “escrow purposes” could not be justified since the monthly payments admittedly received by Chase included principal, taxes, taxes and insurance. Other entries of payments, reversals and transactions relating to insurance could not be explained and would indicate that Chase had at least been negligent in the bookkeeping and accounting for their own posting of entries into loan account for the subject loan.

The Court reserved jurisdiction to consider entitlement and amount of fees and costs to be awarded to the Defendants as the prevailing party in this action.

We have seen numerous cases in which the Borrower won. In this case a Final Judgment of Dismissal not only put the Borrower in position of winner, it established the grounds for a wrongful foreclosure with aggravating circumstances to support a claim for punitive damages in a subsequent lawsuit.

What’s the trick? There is no trick. If your next door neighbor wants to collect your payment for credit cards or student loans you would properly refuse to give him a dime and probably report him for attempted fraud. There is only one creditor in these transactions — some undefined group of investors whose money was diverted into commingled accounts on Wall Street where the money was laundered, dry cleaned and pressed into the service of the Banks who were supposed to be mere brokers. Instead the Banks created the illusion that THEY were the principals. The only way they could maintain that illusion was by getting foreclosure sales in their names. And the only way they could do that was by lying to the court. So far their strategy has worked in most cases because borrowers didn’t realize they were being used as pawns in relation to predatory transactions as defined by the Federal Reserve and TILA.

PRACTICE POINTER: The strategy was not to use up all our arguments against information that was proffered as evidence, but to attack the evidence once it was introduced — hoisting the Plaintiffs up on “their own petards.” Many pro se litigants and lawyers assume that they lost because the court correctly allows a document or testimony as evidence admitted into the record. But the fact that something is allowed as evidence doesn’t mean the matter is proven: for a good trial lawyer it presents a nice target to rip apart false and fraudulent attempts at foreclosure.