Business Records Exception On Shaky Ground: The main point is foundation: the affidavit or testimony by the robo-witness must show that the company he works for is in fact the servicer of the loan, as authorized by the owner of the debt, and that he/she has actual knowledge of the procedures and posting policies of the servicer and the owner of the debt. I would add that this “corporate representative” must show that he/she and the “servicer” is authorized to speak for, and thus appear for the foreclosing party.

see http://www.newyorklawjournal.com/home/id=1202770275522/Casting-Doubt-on-Validity-of-Servicer-Affidavits-in-Foreclosure-Litigation?mcode=1202615326010&curindex=0&slreturn=20160925141040

Hearsay is always excluded from evidence — at least when it is ruled as hearsay. A document is hearsay in nearly all instances and thus may not be introduced into evidence — unless it satisfies the elements of a exception to the hearsay rule of exclusion.

In foreclosures the main hearsay event arises from the fact that no creditor appears in court. It is virtually always a company that claims to be a servicer for the owner of the debt, but the situation is nearly always opaque as to the identity of the owner of the debt who they say authorized them as servicer.

The typical testimony from a robo-witness, on leading questions from the attorney, is that he/she is familiar with the the record keeping process and policies of the servicer and that the letter, or payment history sought to be introduced into evidence was produced in the ordinary course of business from records kept in the ordinary course of business based upon entries made at or near the time of an actual event. Of course, with most of such documents there is no “event” and that is a problem for banks and servicers.

New York seems to be leading the way on the issue of whether these documents are trustworthy exceptions to the hearsay rule of exclusion. See the above link.

Judges in New York now know they will be reversed unless there is clear and competent evidence that the witness can attest from their own personal knowledge using one or more of their five senses — i.e., that they have seen and heard and followed the process of making and keeping records and that they had access to the records showing that the “servicer” was authorized to act as such.

The reason why banks have shifted from the old tried and true practice of sending a representative of the alleged owner of the debt to court is that such a person knows too much and would either be required to perjure themselves or tell the truth, to wit: that the company he/she works for is not the owner of the debt and he/she has no idea who is the owner. Such a person would be forced to admit either ignorance of any transaction in which their employer purchased the loan or that the loan was not in fact purchased by his/her employer.

Such an admission would completely obliterate the claim of the company claiming to be a servicer on behalf of the owner of the debt. This in turn would eliminate the business records exception to the hearsay rule of exclusion. We could go deeper into the number of IT platforms that are maintained and by whom they are maintained and whether the “servicer” even has access to the actual records, but it seems potentially unnecessary with decisions coming from appellate courts who are worried about opening the door on hearsay in millions of other cases unrelated to foreclosure.

Those courts are rapidly retreating from the temporary imposition of an extended exception to the hearsay rule because they can readily see how justice would not be served in criminal and civil matters if the rule remains as loose as it is now.

It is much better for the banks to send someone who knows nothing and therefore cannot accidentally or otherwise tell the truth about these bogus loans and fraudulent foreclosures. The banks are in essence throwing the servicers under the bus, along with the attorneys hired by the servicers. But the walls are caving in on them and they will soon need to put up or shut up — producing a real witness with real (not presumed) knowledge or take a voluntary dismissal. As we have seen in thousands of cases, when presented with that choice the banks voluntarily dismiss their actions even when it means they must pay attorney fees to the homeowner.

The obvious conclusion is that there is no such witness and the facts asserted by the foreclosing party are pure fiction, reliant entirely upon illusion and the erroneous application of legal presumptions.

From the article cited above:

“Lenders will need to find ways in which to meet the new requirements imposed in order to satisfy the business records exception to the hearsay rule announced in decisions such as Royal. For instance, lenders may seek to avoid altogether obtaining affidavits from third-party loan servicers, and instead use representatives of the lender, who can attest to their familiarity with the lender’s record-keeping practices and procedures, in order to submit affidavits and documents to the court.

Alternatively, if lenders continue to insist, even after Royal and the other decisions of the Second Department discussed above, to use affidavits from third-party loan servicers in mortgage foreclosure litigation, then the best practice will be to have loan servicers (as opposed to lenders) be the party to act as the plaintiff in the foreclosure litigation. So long as the loan servicer is authorized to do so by the lender, courts have found that loan servicers have standing to present claims for foreclosure and sale on behalf of the lender that owns and holds the note and mortgage at the time of the commencement of the action. See, e.g., Flushing Preferred Funding Corp. v. Patricola Realty Corp., 964 N.Y.S.2d 58 (Sup. Ct. Suffolk Co. 2012).”

6 Responses

  1. The whole system is corrupt and fraudulent based upon greed and power and Neil has done a great job of exposing a LOT of this. Unfortunately Fannie Mae, Freddie Mac and others are all in on this as far as I can tell and F & F under the control of Government Enterprises Services since 2008 that Neil point out a long time ago.

    The BIG problem in my humble opinion is that we are up in a fight against our very own government!!?? The big question is why do all these organizations continue to support shady lenders “Servicers” who are totally corrupt and fraudulent knowing this full well based upon the BILLIONS of dollars spent in fines, penalties and huge, numerous lawsuits. Most attorneys are just looking out for themselves and making big bucks as well!!! What a government we have!!!

  2. Reblogged this on Matthews' Blog.

  3. How is having the servicer act as plaintiff a good thing? The “lender” doesn’t even know about the action. This is manna from heaven for the servicers who can now cut out all pretense that the “lender” initiated the FC. This is just what they WANT.

  4. “”””FINALLY””” Someone gets it ! There is a lot of this nonsense people are not asking for and our problem is finding the right Legal mind who truly understands and knows the law at differnt levels to be able to formalize a Complaint ..There are a lot of Attorney’s willing and eager to take money once money is gathered then it all changes slowwwww “”if “”completed and then their high selling point for themselves suddenly diminishes until more is needed.

    I would feel most comfortable with a referral of a Paralegal or someone that knows California law to put it all together i represent myself.

    Let me know of you know of anyone able and willing

  5. Wells Fargo Bank is the the Poster Child with starting out with the 1.3 million Washington Mutual Bank (WaMu) Fed Gov insured loans.

    Wells is still servicing somewhere around 1 million of these loans they been servicing since Jul 31, 2006, and did not and could not transfer the loans to JPMorgan because they are not the owner of the debt nor is Ginnie Mae the owner because they did not purchase the debt!

    So Wells Fargo enter the court with a “forged” Security Instrument by MERS and acts as if they purchase the debt because the only way legally to be in titles is if you are the DEBT holder! Once caught, Wells resorts to lying as if Ginnie Mae is the owner, however in saying that Ginnie is the holder of the Notes is not the same as Debt holder that actually purchases the debt.

    There are many other things Neil is trying to prove but let take what clear and correct that!

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