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This Topic Will Be Covered More Extensively

at the 7/26 seminar in Chandler, Az

Editor’s Note: A declaration of an expert is only as good as it is credible. In my opinion it should be used sparingly as a device to survive motions to dismiss, motions to lift stay and Motions for summary judgment. And then it should be used as the basis for submitting requests for discovery —- interrogatories, requests for admission and requests for production. The more it is used to “prove” the homeowners’ case, the more likely it is that the homeowner will be assuming the burden of proof of the entire case when it is the other side that has all the actual facts, documents, wire transfers and other indicia of actual financial transactions in which money exchanged hands.

Under the rules of evidence the rules are lax as to admission of a witness as a supposed “expert” but it is common for the court to ignore the declaration for any one of several reasons:

  1. The “expert” lacks credentials to carry the weight of the testimony and opinion evidence. This involves academic degrees and actual experience in a complex field in which the expert can and does describe clearly what is not apparent from the face of the documents.
  2. The expert advocates rather than reports. Bias and a lack of objectivity is often presumed.
  3. The expert fails to show the court the methods by which he or she reached conclusions and opinions in a way that is understandable to the Court.
  4. The expert is unprepared for cross examination.
  5. Th expert is unprepared to assist in cross examination of an opposing expert.



Affidavit of counsel: At most an affidavit of counsel is only a representation to the Court that counsel has performed some due diligence and that this served as a colorable basis for advocating a position on behalf of his client. It is not evidence in either the auditing or legal sense.
There is no supporting documentation showing that Woodall in fact represents Wells Fargo. Several cases across the country including Wells Fargo and U.S. Bank in particular have demonstrated that at the end of the case, the attorney admits he was not retained by the purported “client” and in fact never even spoke with anyone at the Bank.
Wells Fargo asserts itself as servicing agent but fails to provide any supporting documentation supporting that assertion. Here again, Wells Fargo has been sanctioned, fined and punished for misrepresenting itself as authorized owner or servicer of a particular loan.

The supporting documentation should be a copy of the documentation showing that Wells Fargo was hired by the creditor to serve as servicer. In claims, such as this one, that the loan was securitized, that authority would ordinarily come from a pooling and servicing agreement (PSA). Such authority in the PSA would only be valid if there was a valid financial transaction in which the investor-lender agreed that Wells Fargo would be the subservicer, a fact that can only be established by Foundation documents and testimony from the Master Servicer
A valid purchase of the loan by the investor through the conduit named in the affidavit. In most cases, the presence of a valid financial transaction in which actual money exchanged hands is fabricated and the use of it in court is fraudulent.
In my opinion, this document is fraudulent, fabricated and potentially forged as well.
The attorney asserts that he has the “wet ink” original documents in his possession but fails to state how he came into possession of those documents. In many, if not most cases, the “wet ink” documents are in fact fabrication using technology to duplicate what appears to be original documents. With respect to Wells Fargo I was an actual witness testifying under oath when the Wells Fargo attorney attempted to get the “original” documents into evidence. A cursory examination of the document (I am not a forensic document examiner) revealed obvious defects in a heavy signature that did not create any raised markings on the reverse side. I testified that the document as shown would most likely be a fabrication printed that same morning considering the condition of the paper handed to me. The lawyer ceased that line of questioning and never entered the original documents into evidence. Therefore it is my opinion that the assertion in the affidavit is at least suspect in that it lacks foundation from a competent witness who could substantiate the manner in which the document was produced, maintained and “delivered” to the affidavit.

Without first discovery to trace the chain of custody it is impossible in my opinion, to accept the proffer of these documents as “original” as carrying any presumption.

My presumption is that the documents were fabricated and that the affiant has no personal knowledge as to the origination of the documents or the chain of custody nor whether the documents were or could have been fabricated.
Reference to Note dated August 15, 2005 by and between Union Federal bank as Lender and Borrower.  See above as to whether the attachment is true and correct as a copy of the the note.
I see no foundation for establishing the authenticity of the “original note.” Therefore without proper foundation from a competent witness and other corroboration, it cannot be said that the note is genuine.
The reference to the note raises issues as well. It recites that Union Federal bank was the lender, but the other references in the same affidavit indicate that the funding source were the investors who at least believed they were advancing funds for mortgage originations using one of two conduits:

  • Either the current information and data reports brought to my attention by the Press and analysts are correct — that the finding source was a Bear Stearns escrow account in which the money from investors was undifferentiated and co-mingled without regard to any conduit vehicle that was referred to in the MAster Service Agreement or Pooling and servicing agreement, OR
  • The terms of the prospectus and PSA given to the investor-lenders conformed to the actual financial transaction. Based upon review of this and other transactions like it, it is my opinion that the source of funds was an undifferentiated group of investors whose money was pooled in an escrow account unknown and undisclosed to the investors who thought their money was being pooled into a special purpose vehicle qualifying under the REMIC provisions of the Internal Revenue Code.

In my opinion Union Federal was a nominee for an undisclosed principal controlled by Bear Stearns or an affiliate of Bear Stearns and the terms of repayment to the investor lender promised to the investor lender were different in the prospectus and representations and PSA than those set forth in the purported “note” that established co-obligors who expressly waived subrogation in insurance contracts and as counter-parties to credit default swaps in which Bear Stearns as apparent agent for the investor lender had made payable to Bear Stearns because the REMIC entity was ignored.

The reference to U.S Bank, as trustee has been the subject of litigation all over the country. In most cases, their claim to being a trustee or a trust has been unsupported by appropriate trust language in any document establishing a trustor, trustee, beneficiaries and terms and authority of the trustee. In fact, each case shows that U.S. Bank, which maintains a trust department, did NOT administrate any such entity or funds as trustee but rather as an asset manager outside the of its own trust department. While some trust language appears in the PSA, it is clear that the powers of the trustee or cut back more and more and one reads the securitization documents.

At the end end one is left with a nominee who acts as manager but is subject to the direction of the Master Servicer (Bear Stearns or its affiliate) or under certain restricted circumstances the holders of Mortgage Bonds.

But those “holders” of mortgage bonds were the recipients of a security that was “sold forward” — i.e., in which Bear Stearns as underwriter admitted it did not have the loans yet, but indicated that when they did have the loans, they would be allocated to the REMIC. This allocation was was never done, because Bear Stearns was claiming ownership of the loans when it obtained insurance and the benefits of credit default swaps.

In my opinion U.S. Bank is neither the manager nor trustee of the interests of the investor lenders in the case at bar, and there lacks any corroborative evidence to suggest otherwise. U.S. Bank has been fined and sanctioned numerous times for misrepresentations of this kind in several parts of the country, most notably in Florida.

Reference to Bear Stearns Asset Securities, 2005-AC7. This shows that the loan with the homeowner in this case was already pledged at the time of the loan origination and that it was funded through sources other than the named lender, who was a naked nominee, having neither funded nor purchased the loan — a status that is, in my opinion beyond any reasonable doubt true for each of the parties attempting to support the foreclosure of the subject property.

While the funding came from the investor lenders based upon the representations, prospectus and PSA, the requirements or conditions precedent to said funding did not conform to the actual actions undertaken by the Investment Bank. The REMIC did not fund or purchase the subject loan. The actual lenders would be properly described as an amalgam of investors whose money was commingled in a large commingled escrow account without any documentation supporting such a financial transaction. Hence the investors were duped into funding loans without documentation and in the expectation of repayment terms that differed from the terms expressed in the note allegedly signed by the borrower. Since the alleged note recited a transaction that never occurred and named a party other than those who actually provided the note, it is void. Since the note is void, the ancillary mortgage to guarantee performance under the terms of the note was also void. And since the third party payments were received and unallocated in part to the account of the creditor (the group of investor-lenders whose money was used to fund the loan), the corresponding balance of the borrower was not adjusted.

Thus it is my opinion that the mortgage did not secure the actual loan transaction between the investor-lenders and that an action at law for contribution may exist by the third parties who made payments to the creditor, but these claims have not been pursued because they made such payments with the express agreement with the investment bank that they would not pursue remedies against the homeowner (in order to prevent the obvious double foreclosure that would ensue since the banks and servicers were claiming the right to foreclose as the owners of the loan). Such is the case in the subject transaction.

In my opinion, the REMIC referred to in the affidavit entered into no financial transaction in which money exchanged hands, received no assignment that conformed to the requirements of the PSA.
If a foreclosure is ordered, it would be an adjudication of the real parties in interest who have no notice of these proceedings. They would be required to accept a loan that has already been declared in default and which should have been assigned into the Pool (REMIC) within 90 days after the creation of the REMIC, which by the naming convention used for the REMIC was established in 2005 and which as governed by the assignment and assumption agreement that actually inured to the benefit of Bear Stearns instead of either the REMIC or the investor Lenders.
Insurance payments, proceeds of credit default swaps from co-obligors should have been allocated to the investor lenders and reduced the balance due them accordingly by payment received from the co-obligors, whose entitlement to contribution is barred by their express waiver of contribution.
Without a full accounting from Both the Master Servicer and the subservicer (allegedly Wells Fargo) it is not possible to determine either the status of the loan nor its balance. Thus the homeowner is barred from submitting any meaningful modification proposal with HAMP and is being subjected to incorrect demands that affect the homeowner’s right to reinstatement if the note were to be found valid (which in my opinion it is not). The mortgage, in my opinion also invovles naked nominess for undisclsoed principals and asserts that the property is pledged tos ecure the faithful performance under the terms of the note.
However, the note does not recite the actual elements of any financial transaction between the payee and the alleged borrower. The financial transaction was between the investor lenders through an undifferentiated escrow account and the homeowner, a transaction that is largely undocumented but traceable i the wire and ACH instructions given to the closing agent and which was withheld from the homeowner.
Each and every finding herein is based upon overwhelming statistical evidence of fact and an examination of the actual documents involved in this closing.
The substitution of trustee referred to in the affidavit (indirectly by reference) was false, fabricated and fraudulent. None of the parties had the right, power or financial interest to announce themselves as the new beneficiary nor to appoint a new “trustee” that was owned and/or controlled by the new beneficiary. In my opinion, beyond any reasonable doubt, the actions undertaken by the “substitute trustee” were without any right, justification and excuse and in the absence of dude diligence.
Knowing the conflict between the parties, the old trustee and the new trustee were under a duty to file an interpleader action as an innocent party against the purported stakeholders and a request for fees and costs. The failure to do that is a breach of fiduciary duty to the homeowner and to the beneficiary.
MERS was also a naked beneficiary a fact well established by their own website and findings in trial courts across the country. At not time did MERS ever claim or actually perform any tasks in funding, purchasing, processing, or servicing the loan nor were they in a position to do so inasmuch as they agreed to never pursue that course of action in their agreements with members. MERS is an unsecured data base that was used as as substitute for the recording  requirements in the state of Utah.



Consultation With Neil


5 Responses

  1. Probably impossible to win cases without expert-witness testimony… this is another hurdle against victims…worse yet experts usually don’t furnish services unless hired by lawyer of case because they transfer liability to lawyer …

  2. […] Read more… Posted in AZ, Banks, MERS, News Around The Country, States « “A day of reckoning may soon be coming.” Yves Smith You can leave a response, or trackback from your own site. […]

  3. c’mon Neil, you know or should know that an expert declaration or affidavit has no place in surviving a motion to dismiss. motions to dismiss test the sufficiency of the complaint and do not consider matters outside the pleadings.

  4. Here is an overlooked, rational discussion of the legal implications of declarations and affidavits by the court in Aurora v. Toledo:

    I note that the “MERS” assignment was executed by someone named Joann Rein, who, according to my source, is an employee of Aurora in Nebraska (where the assgt was notarized) i.e., an employee of NOT not only MERS, but an employee of the assignEE. MERS allowing this illegitimate business is outrageous, and it is a breach of any loyalty, if any, owed to the actual noteowner in the absence of written instructions from the noteowner which would pass muster.

    I would print the relevant portions and put it in my new file called
    declarations and affidavits (as evidence or NOT evidence) or cut and paste if you can and then put in that file. Or, just d/l the page and give it the appropriate name for later ref. I haven’t had time to read this post yet, but I would add everything NG says therein to that file that would be useful. Have to build an arsenal. It’s really easy to forget stuff we need to remember. People whose loans went thru Lehman might want to pay close attention to the bottom line in this case regarding Aurora and Lehman, including staying on it – “tickle” it for a time to see the outcome (might be a bottom line at this time; I don’t know).

  5. “Editor’s Note: A declaration of an expert is only as good as it is credible…. TO OBTAIN AN EXPERT DECLARATION FROM NEIL GARFIELD PLEASE CALL CUSTOMER SERVICE AT 520-405-1688


    I have a burning question, Neil… Are you saying that, unlike any other expert declaration, one provided by Neil Garfield is better and more credible? If so, why? Any case law you could provide showing that your experts get better results than anyone else?

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