Where's the Beef? Hell if the Banks know.

To listen to the West Coast Foreclosure Show:

Note: For those readers too young to remember, in 1984, the Wendy’s corporation launched an epic ad campaign called, “Where’s the Beef?” It was aimed at McDonald’s and insinuated that the hamburgers at McDonald’s skimped on the beef.  This campaign was launched at the same time McDonald’s was accused of using earthworm as meat filler.  The campaign was a huge success and began Wendy’s expansion.

By J. Guggenheim

Investigator Bill Paatalo joined attorney Charles Marshall on the West Coast Foreclosure show to discuss why the major banks are unable to provide a bank witness in litigation who has knowledge of the loan.  Bank witnesses are unable to provide information regarding the note location, who the creditor is, what the bank paid for the loan, or if the loan was transferred in compliance with the Trust’s Pooling and Servicing agreement.  When deposed, the witness says repeatedly, “I don’t know”, and when they are asked who can provide this information- they say, “I don’t know.”  Where’s the beef?

In loans that were originated between 2000 and 2009 (and often afterwards), the notes were deliberately destroyed upon securitization and the original loan files disappeared. The only way for a bank, servicer, or trust to demonstrate ownership now- is to create (forged) notes and assignments out of thin air via a desktop publishing platform.  This is typically done by a third-party like Black Knight (LPS) to create distance and plausible deniability.

The bank witness, during a deposition or in a sworn affidavit, will base their ‘expertise’ and knowledge on the fabricated note and information shown on a computer screen.  The bank witness will have no personal knowledge of prior loan transfers or sales, or the boarding process, but have been coached by bank counsel on how to be evasive when asked, “Where’s the beef?”  The bank doesn’t want the witness to leak information that might assist homeowners, so the witness will parrot, “I don’t know” repeatedly.

At this point, an aggressive litigator will go for the jugular, but too often, the homeowner’s attorney “let’s their foot off the accelerator, ” and doesn’t press the issue, according to Bill Paatalo.  Aggressive motions and objections must be used to expose that the witness is lying, being evasive or coy, and has no personal knowledge outside of looking at a computer screen.  Paatalo has observed that bank witnesses routinely provide inconsistent testimony, lack training on bank systems and procedures when pressed, and have little credibility.   Therefore, they should not be entitled to any presumptions of truth when their statements are ambiguous and it is apparent they know nothing.

Attorney Charles Marshall states that it is a travesty that the courts allow this to go on, and a homeowner should be allowed to prevail when the bank cannot provide a credible witness or reliable evidence that it owns a loan.  Marshall suggests that homeowners and their counsel hone in on discovery and break out the rules of evidence.  Through a declaration, on the record, it becomes obvious the bank doesn’t have admissible evidence.  Marshall recommends framing the key issues and then filing a Motion to Dismiss to knock out the declaration.

Once the homeowner has evidence the bank witness lacked knowledge, they should file an affidavit, on the record, that the bank was unable to comply with the rules of evidence, and that there is no proof the bank owns the loan. A motion for summary judgment should be filed, but only if you have hard evidence, otherwise the other side will likely prevail.   Institutions routinely file Motions for Summary Judgment after discovery and depositions are taken- and it is useful to beat them to the punch.

Paatalo says the reality is that the opposition is relying on a bank witness with no personal knowledge, who looks at a computer screen, and then states the bank has standing- despite lacking evidence.  He points out that a Texas task force (transcript here) was created in 2007 to make suggestions how to handle the document deficiencies seen in foreclosure.  A retired judge on the panel stated on the record something like, “If there are no witnesses with evidence, what will we do?”  The task force surmised that the foreclosure mills could handle the foreclosures even though they had no way to track ownership, but relaxed believing that most people would assume their loan servicer was the lender, and not ask questions.

Michael Barrett (now deceased), of the Texas foreclosure-mill Barrett-Burke, Castle, Daffin & Frappier, admitted that the mandated paperwork required to lawfully execute a foreclosure does not exist in 90% of the cases:

“So finding a document that says, “I am the owner and holder, and I thereby grant to the servicer the right to foreclose in my name” is an impossibility in 90 percent of the cases.” (transcript page 27, line 16).

Mr. Barrett confirmed “There really isn’t such a document” (Page 27, line 8), and it was revealed by Judge Bruce Priddy (See State of Texas v. Judge Priddy D-1-GV-08-002311) when he stated on the record:
“They just create one for the most part sometimes, and the servicer signs it themselves saying that it’s been transferred to whatever entity they name as applicant”. (page 28, line 10)

First American Title added:
“The other problem that I see — and, Tommy (Redding), you and I talk about it regularly – that we have a bunch of servicers that are corporations or trusts attempting to foreclose on behalf of other trusts using a power of attorney, and I don’t think that’s really proper. I mean, we all kind of turn a blind eye to it, but I think that’s an issue that’s out there that somebody could use to potentially attack a foreclosure” (p. 33, line 5).

Even back in 2007, the foreclosure mills and judges knew they had a problem.  The only solution possible is for the judiciary to play blind, make erroneous presumptions that fly in the face of the evidence, and stonewall the homeowner.  Bank regulators, the FBI and state Attorney Generals were told foreclosure fraud was not a priority.

Paatalo compares what the courts are doing now to a scene in the movie, Shawshank Redemption, where protagonist Andy Defresne speaks about how to get away with fraud:

Red: Andy, you can’t just make a person up.
Andy Dufresne: Well sure you can, if you know how the system works, where the cracks are. It’s amazing what you can accomplish by mail. Mr. Stevens has a birth certificate, a driver’s license, social security number.
Red: You’re shitting me?
Andy Dufresne: If they ever trace any of those accounts, they’re gonna wind up chasing a figment of my imagination.
Red: Well, I’ll be damned. Did I say you were good? Shit, you’re a Rembrandt!
Andy Dufresne: You know, the funny thing is, on the outside, I was an honest man, straight as an arrow. I had to come to prison to be a crook.
[Red laughs]

The banks, courts, law enforcement and the foreclosure mills know where the cracks are, and the homeowner is at a disadvantage trying to find them.  It is common knowledge that the securitized mortgage loans are a figment of the industry’s imagination.  The homeowner, through targeted litigation and discovery, must find the bank’s lies and bring them to the court’s attention.  It is a tall-order and the bank is betting your attorney will not force the issue, allow deceptive depositions to stand, and fail to compel discovery.  That has been the bank’s strategy to date and it has been effective.

Bill Paatalo points out that the banks and servicers have revised their gameplan and are now creating new-fangled trusts and resecuritizations, while defective loans are being sold in bulk to debt buyers.  By repackaging and transferring what doesn’t even exist, another level of fraud and deception is created.  In fact, according to Paatalo, “Investors are buying nothing but revenue streams, insurance proceeds and servicing advances- not loans.” This convoluted scheme is based on illusion and nothing more.

Paatalo proves his point by bringing up a recent US Bank interrogatory (USBank ROG Response – NV – cannot acsertain amout paid for loan), where the court ordered the bank to reveal how much they paid for an individual loan. The bank witness claimed that US Bank could not ascertain how much it paid for the individual loan because they purchased the loans in bulk.  The next question would be:  if the bank purchased the loans in bulk, did they obtain the note, loan history, and prior transfer history?  Of course not- there is no proof of individual loan ownership.  If US Bank is a depositor, why was the note never endorsed?  Inquiring minds want to know.

Paatalo says the banks have created a ‘fact pattern’ justified by information on a computer screen.  All major lenders signed a consent judgment with all 50 state Attorney Generals that stipulated that all verifiers of mortgage information must be trained, and the training documentation should be placed in their employee files.  This is not being done.  The bank witnesses repeatedly claim ignorance, while the judge allows them to evade answering any question that would assist the homeowner in proving their case.

If a homeowner is to prevail they must focus on the hearsay rule and conduct an evidentiary proceeding to get the facts on the record, and preserve the record for an appeal.    It is the homeowner’s job to raise the issues! Ask questions like: when did they take control of the file, where is the note, how much they paid, who the holder in due course is, and demand to see the foreclosure mill’s retainer agreement with the lender.

Paatalo and Marshall confer that corporations must have corporate counsel, but often there is no connection between the law firm and trust, and instead third parties are behind the scenes pulling strings.  The bank witness should be pressed to disclose who these parties are and demand evidence of representation authorization.  In Paatalo’s own case, he challenged the bank to bring in its own witness/expert, and state on the record that what he was stating was not true.  To date, the bank has not taken him up on his offer- because they know what he says is true, and they can’t refute it.

Banks are not compelled to provide an evidentiary trail, or to  provide complete and accurate information.  Instead, they rely on a ten-minute cursory legal proceeding to establish standing.  The bank relies on a sham entity that doesn’t hold anything and relies on this ruse to illegally foreclose on homes.  The arrogance of the big banks is reinforced by the lack of regulatory enforcement, sanctions or fines.  Lenders and their attorneys are allowed to lie, cheat and steal with impunity, but a good attorney can stop them in their tracks.

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