Transcript from Neil Garfield Show on Discovery

Hi Neil Garfield here and this is Thursday April 4th, 2019. Get rid of the shame, get rid of the doubt, and get rid of the feelings of inferiority. Homeowners who signed papers were in fact unknowingly issuing unregulated securities for the sole benefit of investment banks. No sharing with homeowners. Almost no sharing with investors.
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The investment banks (we used to call them brokerage houses) kept virtually all the money they created. Those investment banks converted their roles as intermediaries, that is to say securities brokers, to acting as though they were principals and then keeping the money concealed from the real parties in interest — the investors who put up the money and the borrowers who signed loan papers.
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So stop feeling guilty about cheating the poor banks out of payment to which they are NOT entitled. This wasn’t banking and despite all appearances to the contrary it was not really lending either when you back up and look at it end to end. And that is the part that is missing from the analysis when lawyers look at it as strictly a loan transaction.
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The true picture is full of holes. It is up to the foreclosure defender to reveal those holes until a judge is uncomfortable with the proof. That is when the rubber stamp judge’s head turns and that it when he/she rules for the so-called borrower .
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Judges do not rule for borrowers because they believe that securitization is a scam. They rule for borrowers when the securitization scheme or scam fails on the proof. And the way you reveal that failure is the secret to winning foreclosure cases.
Every time you defend a foreclosure you are throwing a monkey wrench into a well planned well oiled fraudulent scheme to deprive society of the benefits of a level marketplace where everyone has a chance to participate.
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The entire scheme depends completely on concealing the fact that the loan is the cornerstone of a larger transaction wherein the players are going to make money in multiples of the amount loaned. If they disclosed that they were going to resell the name, identity, signature and reputation of the borrower and the borrower stills signed then so what?
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But they didn’t disclose it and if they had borrower’s would have gone shopping for people who would let them share on the bounty or they wouldn’t have signed at all because they didn’t like   banks selling their name and reputation and their  future in the open market.
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Winning foreclosure cases. Sometimes it is the homeowner. If it’s the homeowner it’s only because the homeowner defended aggressively and the bank or servicer had nothing. Tonight I am going to discuss how foreclosure defense attorneys win cases in which they are defending homeowners from foreclosures,.
Keep in mind that the sole purpose of securitization in every form is diversification of risk. So the risk of loss is diversified. And by definition that means the owners of the debt are diversified because only owners of debt can suffer a loss due to non payment.
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So when the banks present a single claimant they are doing so in defiance of the basic black letter principles of securitization.
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If they are presenting a single claimant then by definition that claimant must be acting in a representative capacity, and not as owner of the debt. So they are presenting the claimant as a party authorized by law to enforce the debt on behalf of the owners of the debt. But without asserting for whom they are enforcing the debt they have not presented any true claimant.
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And that is where the first big hole is. They can say they are enforcing on behalf of certificate holders but the facts are that the certificate holders have not right, title or interest to the debt. Ask the right questions and insist on answers and that notion collapses.
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Certificate holders have a promise from an obligor who is supposedly the REMIC Trust but in reality is the investment banker doing business as the Trust.
They won’t say they are enforcing for contract holders because that would expose the basic holes in what they are calling securitization but is really a Ponzi scheme. The contract holders have no right to enforce the debt, note or mortgage even though they may hold equitable or legal title.
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And the investment bank can’t say they are enforcing on behalf of themselves, even though they funded the origination or acquisition of the debt because they have long since divested themselves of any ownership of the debt, several times over.
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If securitization was real then the REMIC Trust would not merely be a fictitious name used by the investment bank to  sell certificates and order foreclosures. No, the REMIC Trust would actually BE the owner of the debt. SO the lawyers would then be able to say that the ReMIC Trust paid for the debt and they would be able to prove that. Has anyone seen such an allegation or assertion by lawyers in court? I haven’t. You never will because securitization today is a sham and scam.
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Normally the only defense to foreclosure is payment. But payment has already been made, so you need to show the gaps in their case without taking on the burden of proving facts you can’t prove. Truth be told not even then investment banks could prove some of those facts because of all the off balance sheet transactions that got spun out into the shadows banking market where they are now virtually untraceable.
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Tonight we talk about how both the banks and the lawyers are getting away with it and what we can do to force them to actually prove their case and be held accountable when they present false claims.
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Remember that is more likely than not that if your house is foreclosed and sold, the proceeds will NOT be used to pay anyone who owns your debt. So stop feeling shaky about defending. Shame is undermining  fairness in the justice system when it comes to foreclosures.
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Remember you can always come back and listen to the show again or send it to a friend by going to blogtalkradio.com and looking up the Neil Garfield Show
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  I am broadcasting live from Duval County Florida and this show is brought to you by the livinglies blog, GTC honors, Lendinglies, AMGAR, and the Garfield firm, and this show is specially brought to you because of donations to the livinglies blog from listeners like you. Thank you. And for those of you who are not contributors we ask that you HIT THE DONATE BUTTON ON THE THE BLOG OR call 954-451-1230 or
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The path to victory in defending foreclosures is based upon the simple premise that the claimant or the claim does not actually exist. If your adversary really owns your debt because they paid for it then they are entitled to payment, unless of course they owe you money in recoupment for abusing the loan closing process to mask a much larger fraudulent scheme, of which the loan was only a small piece.
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The strategy is to reveal the gaps in the proof by showing lack of foundation, lack of personal knowledge and lack of truth. You don’t accept the burden of proof by alleging facts that you cannot prove. The strategy is to focus on the prima facie case that the foreclosing party needs to make to support the foreclosure. Poke holes in that and you win.
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I’ve seen hundreds of cases where a so-called rubber stamping judge ruled for the borrower on key issues that caused either a judgment for the homeowner or more often than not, resulted in a confidential settlement. The settlement occurs because your opposition must avoid, at any cost, the publication of cases in which the claim or the claimant is shown to be nonexistent. That could effect not only your case but thousands of other cases.
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Your job is to get to the point where you present a credible threat that your case will reveal the sham nature of the claim and the claimant.
The tactics used to achieve this are ordinary litigation tools that are set forth in every compilation of the rules of civil procedure.
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Motions directed at the pleadings are not generally successful unless you get a judge willing to listen to the fact that a claimant has not actually been named.
So the next step is to file an answer in judicial cases and a complaint in nonjudicial cases that challenges every single assumption or implication of the claim without exception. In judicial cases you would also add actions in recoupment to your affirmative defenses that a track the formation of the alleged contract, seek disgorgement, and even quiet title if the fact patterns supports it.
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Then comes the real work that most pro se litigants and many lawyers are unable or unwilling to do. Most cases are won and lost in discovery. The mistakes involved with discovery are many but they all emanate from the belief that discovery is really just a thing to do rather than an effective tool you are going to use against your opposition.
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If it’s just a thing to do then don’t do it. All you are doing is telegraphing a defense that enables your opposition to surprise you at trial with some novel argument that you are unprepared to contest.
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If you really want to win, then you need to send out careful constructed demands for discovery at the very least in the form of Interrogatories, Requests for Admission and Requests for Production.
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Next you must create footprints in the sand to show that you tried to resolve disputes amicably. Then file motions to compel and when they still don’t comply file motion for sanctions and eventually motion in limine. And be prepared to object to testimony or documents based upon violations of discovery at trial as well as objections based upon hearsay, foundation, relevance, etc. Those objections are easy because most lawyers don’t know how to ask the right questions in the right way,. If you catch them at it, the evidence is excluded. That is how some cases end up deiced contrary to what seems obvious. Bad presentation of evidence.
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[Editor’s notes: Beware of pretrial orders since they often have the effect of barring objections or evidence if you don’t  comply with them. Objections must often be anticipated and preserved when a pretrial order is rendered.]
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In foreclosure, bad presentation of evidence and bad presumptions are the foundation for every defense. This requires patience and persistence to gradually turn the head of a judge who came into the courtroom annoyed that you are contesting an inevitable result. But that same judge will rule in your favor if you can persuade the judge that too many things are missing to allow the foreclosure to go through.
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It becomes a matter of procedure, which is to say that the judge doesn’t want to allow sloppy paperwork and unsupported testimony to price a benefit even though the judge might think that the party making the errors has a valid claim. Judges, at their root, are there to calls balls and strikes.
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So let’s look at these steps, one by one starting with your answer or the basic elements of your complaint to stop a foreclosure in a nonjudicial state.
Answers to foreclosure complaints filed in judicial states should say it’s true or it’s false by simply stating admitted or denied.
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Complaints must, because of non judicial procedures, essentially do the same by stating the implied allegations and then denying them point by point. In some ways this gives the homeowner greater leverage and more freedom to set forth the issues of the case than in the judicial states where you are limited to denying only the allegations that are made.
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Since you are writing the complaint you can say anything you want about their claim and lay out what is implied in their notice of substitution of trustee, notice of default and notice of sale. Then deny it and state your reasons without asserting too many actual facts because the facts you allege are the facts you must prove.. Your real strategy is to say there is an absence of foundation for the existence of the claim or the claimant.
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In judicial foreclosures it is wise to file affirmative defenses with your answer. Those affirmative defenses establish matters in issue and generally support your reasons for wanting discovery which will be challenged if you strike a nerve. If  you haven’t struck a nerve then you have not filed the right affirmative defenses. You should be asking for disgorgement of all money paid by the homeowner since there was no right to collect it, quiet title and recoupment, not damages,  for violation of the FDCPA and perhaps other statues like RICO. Remember that the SOL does not apply to recoupment in most states. Check with local counsel on that.
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In Non judicial states you can’t plead recoupment because it is an affirmative defense.
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Then move immediately into discovery and put the pressure on. Don’t use boilerplate forms. Judges hate that and on the Federal bench they are looking at ways to ban it. They need to be tailored to this specific case and the specific issues that are matters to be decided at trial.
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Since you are probably limited in the first set of Interrogatories to 25 questions including subparts you need to go straight to the heart of the matter but first you need to identify exactly who is answering and what is the basis of their knowledge for answering these questions. This step is often skipped.
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By failing to have someone with actual knowledge answer the questions they have opened themselves up for sanctions. Every Motion to Compel Motion to Compel, Motion for Sanctions and Motion in Limine brings to the attention fo the court that the issue of the viability of the claim and the status of the claimant is front and center.
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You also need to identify custodians of records that you think will show the absence of a claim or the status of a claimant.
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Then you need to go to the heart of whether the debt is owned by anyone in the chain and if so who that is and how you can confirm that assertion.
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Ask for the title of certain documents and where they are kept and by whom. But more importantly ask what are known as contention interrogatories. They start off with language like this “Do you contend that the Plaintiff’s name is US Bank?” Do you contend that the Plaintiff’s name is US Bank as trustee for SASCO certificate series 2007-123A. Do you contend that said named Plaintiff is the owner of the debt, to wit: is the Plaintiff a legal entity maintaining books and records that include the subject loan as an asset receivable.
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You want to smoke them out in clear unequivocal language so when they refuse to answer, and they will, or if they answer evasively, you can file a motion to compel and get an order  for them to answer the question as written without evasion. When they do it again you file a motion for sanctions.
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While the court won’t usually strike their pleadings, and sanctions may be light  the next step is the one that counts. After they have repeatedly failed to answer direct questions about the claimant’s status or the ownership of the supposed claim you may then file a motion in limine. Motions in limine are not granted often but when they are here is what happens and why I think you should file the motion if you have the grounds to do so.
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You have grounds to do so if the claimant wishes to put on evidence that supports its claim for enforcement of the note and foreclosure on the mortgage or deed of trust and that evidence that they wish to put on was not given to you in response to direct questions you asked about such issues they you are entitled to a pretrial order preventing them from putting on that evidence.
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Remember also to use Requests for admissions since they usually are grounds for the award of fees if you prove the matter that they denied, even if you lost the case. Such rules are especially helpful when you win the case as you can ask for fees when most interpretations don’t allow fees for homeowners in foreclosure cases. With Requests for admissions the court does not have much choice but to award something especially where you won.
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So that is a summary of some of the tactics and strategies to use to win cases involving foreclosure defense.
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We are here to help you as needed. Just go to www.lendinglies.com or send us a Registration statement for a free preliminary review.
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7 Responses

  1. Kali — very interesting. But, Fannie/Freddie REMICs invested in upper tranches of the private label bank “trusts” too. That is they invested in the securities of the scam trust transactions.

    I find this very strange, because in those private trusts the loans were largely originally direct guaranteed Freddie/Fannie loans. – which then became private labeled “trust” loans – which then became Freddie/Fannie REMIC investment securities.

    What was the difference for Freddie/Fannie? Profit — higher (adjustable) rate on the private label MBS tranches they then invested in.

  2. @ ALL

    Also, EVERYONE should read the contents of the linked Fannie Mae letter, to wit:

    October 30, 2008
    Russell G. Golden
    Director of Technical Application & Implementation Activities
    Financial Accounting Standards Board

    “Fannie Mae is not the transferor to the MBS trust as defIned by SFAS 140. Rather. Fannie Mac is an agent for the Iender, as we act for and on behalf of the lender in delivering the mortgage loans into the trust for securitization. Fannie Mae has no control or discretion in its facilitation of the transfer, as upon receiving the mortgage loans. Fannie Mae is only abie to deliver them into the trust as directed by the lender.”

    “Each MBS trust is treated as a “grantor trust” under the Internal Revenue Code. and thus for tax purposes. the beneficial owner of a security will be considered the beneficial owner of a pro rata, undivided interest in each of the mortgage loans in the underlying pool.”

    https://www.fasb.org/jsp/FASB/CommentLetter_C/ViewCommentLetter&cid=1175803405568

  3. @ ALL

    EVERYONE should read the contents of the linked Fannie Mae letter, to wit:

    July 31, 2003
    MP&T Director
    Financial Accounting Standards Board

    “Under no circumstance does either Fannie Mae in its corporate capacity or the lender retain control of the loans within the trust. Fannie Mae serves as both the guarantor and trustee for the trust.”

    https://www.fasb.org/jsp/FASB/CommentLetter_C/ViewCommentLetter&cid=1175803015033

  4. Thanks Neil !

  5. Ian — I have seen that!!!

    Neil makes great points here. But, what if the judge refuses to enforce discovery? I see that over and over and over. And, it does not matter if you are paying or not.

    Someone has instructed these courts how to proceed. If the truth ever came out, we would be back in 2008 with the government whining about financial collapse.

  6. Javagold- I read in a number of throrojghly reaearched cases where the property taxes were being paid by Corelogic. Not sure if that’s true for all though.

  7. Homeowners. Should only need to pay property taxes. Which leads to the next question. Who is paying the property taxes ?? And where is that money coming from. ??

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