WHO CAN BE AN EXPERT WITNESS? Virtually anyone including a party to the litigation in most cases.The issue is really credibility, which comes down to credentials, knowledge, demeanor and knowing what to expect when your opinion or credibility is attacked. The side issue of course is the credibility of the party or attorney who is presenting the expert witness and whether he/she knows how to elicit credible testimony on direct examination such that the Judge is truly enlightened rather than baffled with bulls–t.

I would caution TILA auditors and forensic reviewers about considering their position as either third party fact finder or as expert witness. I think you cannot credibly be both. The expert should be someone who can say they have reviewed the audit or review or analysis and they have done some research on their own and and have come to the following conclusions based upon a reasonable degree of certainty within the context of the finance markets, housing market and mortgage origination and processing industries. Thus the attack on the audit becomes a matter for another day. If you are stuck defending the audit you will never get to the point where you are expressing fresh, independent expert facts and opinions about the industry and about the loan in question.

WHY BE AN EXPERT WITNESS? First, because the usual expert in complex litigation (i.e., mortgage litigation cases involving securitization) will charge an average of $350-$600 per hour with a five hour minimum and an additional $2500 per travel day plus all out of pocket expenses. Such experts will charge $1500-$2500 for an Expert Declaration (which I offer, but don’t have the time to meet all the demand, hence the workshop to increase the number of people who can sign such a document and defend it under cross examination or deposition). Even with a comparatively light caseload, the income is significantly higher than other areas of service for distressed homeowners. Another reason is there are pitifully few of us who can serve as true experts that can defend our positions under questioning. So the market is wide open for a lot of experts to enter the fray.

WHAT IS EVIDENCE? While there are many fancy definitions, for the purposes of this post and most actual situations in the courtroom, evidence is anything the Judge states that he/she is allowing in as evidence or anything that is presented in an evidential hearing without challenge from the other side. This one point accounts for nearly every situation in which the lawyer or litigant lost. Lawyers for pretender lenders take control of the courtroom dialogue but “laying the foundation” when they are neither a witness nor even knowledgeable about the loan. So when the lawyer comes in and introduces himself and says he represents Wells Fargo, you might want to challenge that and say you want proof that he does in fact represent Wells Fargo, or executive Trustee Services or whoever they say they represent. If he says his client is the lender, you want to challenge that and ask the Judge if this is an evidentiary hearing so you can cross examine the attorney under oath as his testimony, changing him from lawyer to material witness. Most lawyers and litigants walk out open-mouthed not knowing what hit them. Well here is the answer: representations were made in court by an unsworn witness without any personal knowledge (go look up competency of witnesses) of the facts WITHOUT CHALLENGE — so the Judge took the representations as true (as though you were stipulating to them). A quick look would reveal to anyone that you lost as soon as those representations were made and not challenged. If instead, you said “Judge, I object. I have an expert report that concludes that the facts are different than what counsel is representing,” then you give the Judge an opportunity to inquire and to allow discovery and an evidentiary hearing. And from what we have seen so far, the pretender lenders cannot survive discovery much less an evidentiary hearing UNLESS YOU LET THEM.

Oh yeah, you better be right.  I should mention that in order to be an expert witness, you have to really know what you are talking about, be able to explain it in simple terms, and be strong enough to stay on message when challenged. That’s why you need the other seminars and boot camps that are being offered around the Country.

10 Responses

  1. What kind of expert witness would I require to create a need for the plaintiff in a foreclosure to bear the burden of proof that they have not already been compensated and the loan set off by payoffs of Credit Default Swaps or any other type of instrument that is used to hedge the bank”s liabilities? Could the bank have actually made money on my default? If the bank is not damaged does it have a right to come after collateral debt it sold already, or never paid for in the first place? What is table funding got to do with who owns the loan? Who can set me straight on this, or at least create enough question that the bank would have prove that it wasn’t paid off?

  2. Good post on expert witnesses. Wehther a person qualifies as an expert witness, technically, and whether theri testimony is persuasive is of course two different questions. So the issues get complicated. One can be an expert witness based on real-world experience rather than training. (For example, “If you don’t put oil in your engine, the engine will be damaged.” or “properly installed electrical wiring normally does not cause fires.”)

    As for TILA audits, I use and I am very impressed with Mortgage Fraud Examiners at http://www.MortgageFraudExaminers.com

    Finding TILA violations (knowing what to look for) is of coruse the first and most important task. Once identified, some of these can often be proven as a question of law, witrh the predicate facts established.

    However, many TILA companies are simply running numbers through a software package. They may face difficluty explaining or defending a report on the wtiness stand unless they truly understand what the software package is doing. I know that Mortgage Fraud Examiners does their audits from the ground up.

  3. Dana,
    I can provide fact finding for the Prospectus Supplement, PSA and the Assignment and Assumption Agreement. I am in California. If you need this from someone in Florida I can provide a referral.

    You can reach me by email or call me at 8871200 …

    The area code is 530

    Thank you,
    Dan Edstrom

  4. expert foreclosure analysis needed
    Any suggestions for west coast of Florida?
    Dana Brigham

  5. I need to find a qualified forensic auditor and/or fact finder to help in foreclosure in Bradenton Sarasota Tampa St Petersburg Florida
    Dana Brigham

  6. Todd,
    The two posts are in regards to the prospectus supplement for the following securitization “deal”:

    Wachovia Auto Owner Trust 2008-A with a closing date of June 19, 2008.

    While this is for “installment sale contracts” and “installment loans”, my opinion is that these same issues apply to all securitizations, whether spelled out directly in the SEC filings or in collateral documentation that is not immediately “visible” – or by the actual substance of the transaction.

    Disclaimer: I am not an attorney and this is not legal advice.

    Dan Edstrom

  7. Dan: You haven’t referenced those ‘prospectus’ as to their source, so we’re unsure of their ‘application’ right?

    Storm: I agree that it’s never good to attempt to act like an attorney when one is not.


    An “expert” has been defined as a person who possesses special skills or knowledge beyond that of the average layman. Fed. R. Evid. 702 speaks of expert testimony:

    “If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise.”

    An extremely important amendment to Rule 702, that became effective as of December 1, 2000, takes a powerful stab at killing 80 years of confusion and ambiguity concerning the knowledge required by an expert in a given field and legitimacy of the field itself. A line of cases stretching back to 1923 has kept these important issues in a state of turmoil. The amended rule, which is effective as of December 1, 2000, states:


    Most “TILA auditors” and “forensic reviewers” using software will not qualify because the software is “unreliable” and most “TILA auditors” and “forensic reviewers” using software can’t give a legal opinion as to what is really a finance charge and what is not!

  9. Alina,
    I found this in an automobile securitization “deal” prospectus:

    Receivables in Electronic Format. Following the construction of an electronic vaulting system (including licensing the use of specific software) designed to meet all UCC Article 9 and American National Standards Institute standards to permit the perfection of a security interest in receivables evidenced by electronic installment sale contracts and installment loans through control and to transfer the security interest in that type of receivable to an issuing entity, certain of the receivables of an issuing entity may be maintained in electronic form. For a discussion of certain risks associated with installment sale contracts and installment loans maintained in electronic format, see “Risk Factors – Interests of other persons in the receivables could reduce the funds available to make payments on your securities” and “Material Legal Issues Relating to the Receivables – General”.

    Interesting. seems that they forgot to get the alleged borrower’s to agree with this. That is unless it is in their installment agreement and they didn’t read it, didn’t notice or didn’t understand.

    Dan Edstrom

  10. I found a prospectus with this statement:

    Limitation on Right to Institute Bankruptcy Proceedings

    Each trustee and each securityholder, by accepting the related securities or a beneficial interest therein, will covenant that they will not at any time institute against the issuing entity any bankruptcy, reorganization or other proceeding under any federal or state bankruptcy or similar law.

    Sounds like the parties to the “deal”, including the certificateholders, cannot force the “issuing entity” (the Trust) into bankruptcy or receivership. Looks like it is up to us to do this.

    Dan Edstrom

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