I Have a Plan Too. Statutory Changes Governing Loans and Foreclosures.

It is currently up to the homeowner to forcefully and convincingly persuade a judge that the party seeking foreclosure is unrelated to the debt and that foreclosure won’t result in paying down the debt — because the proceeds of foreclosure sale, contrary to popular assumption, are not going to any owner of the debt carrying a risk of loss on that debt.

While it is possible to reveal this under current statutes, the burden is unfairly placed on the homeowner to “prove” or reveal a defense to a claim that should never have been filed in the first place.

The fact that the current statutory scheme allows the false claimants to get to second base by fabricating and forging documents is an obvious defect in our current system of laws.

I recently received an email from a contributing reader who was complaining that judges are to blame for the foreclosure mess.

Correction. While judges might share some blame, it was the investment banks who did this, and their control over state legislatures and Congress has fostered an environment of moral hazard.

If you go to a doctor and tell him/her that your left foot  is hurting don’t be surprised if he/she fails to diagnose brain cancer. Maybe the doctor should have or could have discovered brain cancer but he/she had no reason to look.

In court the judge is there to call balls and strikes. If a homeowner fails to present a viable defense the court is required to enter judgment for the party claiming foreclosure — even if the judge suspects that something is wrong. But is is also true that a judge is supposed to use their own eyes and ears and to determine if there is at least facial validity to the documents being presented. And it’s true that many judges came to the bench with biases that work against homeowners.
But I can say from personal experience that while some cases are lost due to lazy, biased or even corrupt judges, the primary reason a homeowner loses is that both lawyers and pro se litigants have failed to persuasively rebut the presumption arising from facially valid documents.
Both homeowners and lawyers often fail to adequately prepare before a hearing and instead focus their minds on why they are right without rehearsing how they will convince a judge that each step is subject to a viable challenge.
When you go to court the case stops being about right and wrong and becomes a contest of who can be more persuasive. Instead of viewing the judge as an adversary litigants should view the judge as a jury who has no stake in the outcome — because most of them don’t.
Your real beef is with the statutes that allow legal presumptions to arise from apparently facially valid documents and rules of civil procedure that allow a fake claimant with a fake claim to get to second base before the homeowner can even begin to mount a credible defense. By that time the foreclosure mill has virtually full control over the case narrative.
While facial validity can and should be attacked, the statutes should be strengthened to assure that the claimant in foreclosure is actually a creditor who has paid value for the debt or has been authorized by an identified creditor who owns the debt.
The statutes should explicitly require an evidentiary hearing similar to probable cause in which the claimant comes forward with a history of debt ownership and transfer and possession of documents. Nearly all foreclosures should and would fail, often with prejudice, at such a hearing.
Such a statutory change would maintain the burden of proof on the claimant and prevent shifting the burden of proof to the homeowner who has minimal access to actual relevant data concerning the loan. Such statutory changes would require servicers to disclosure the party to whom they render payment after collection from a homeowner, and whether such party is yet another conduit or servicer and if so, for whom.
Additional statutory changes should include provisions from the FDCPA and RESPA where a wrongful foreclosure results in an award of compensatory damages including emotional distress, punitive damages, sanctions, and required orders to correct the chain of title and cancel the instruments that were recorded in derogation of title.
Further, a statutory change and require the claimant itself to be clearly identified would go a long way to curing the current and past tidal wave of wrongful foreclosures. The claimant should be identified as being both the creditor who owns the debt and the party who would be legally liable for courts, costs, sanctions or other relief ordered by a court in favor of the homeowner.
Current statutes provide the raw material for such remedies but place an undue burden on homeowners who have no access to the information that is being against them and in violation of law.
But it is currently up to the homeowner to forcefully and convincingly persuade a judge that the party seeking foreclosure is unrelated to the debt and that foreclosure won’t result in paying down the debt — because the proceeds of foreclosure sale, contrary to popular assumption, are not going to any owner of the debt carrying a risk of loss on that debt.

5 Responses

  1. All — well put. We are the scapegoats of the greatest fraud scheme in the history of our country. It does not matter whether you are paying or not — all a victim. All targeted. This is only related to non-bank origination.

    Can hand all to a judge on a silver platter, but that will not change your circumstances. I urge Neil, over and over again, to make sure investigation includes a COMPLETE and prior history. This investigation is deep and complex. I hope Neil can do.

    Markets have had a band aid that is slowly peeling off. Must stand up together and say – “We will no longer be victims.” Until we do that, everything is very difficult. Think of the chronology of the “financial crisis” 1) Began about in year 2000, escalated in 2004. 2) Shut down in late 2007 – how does “securitization” completely shut down in 3 years? Only by obvious fraud. 3) Bail Outs. 4) Deregulation in 2000/2001- no one was watching 5) Borrowers were decided by those in authority to be blamed (2008) 6) Media promoted “Deadbeats” — “bought too much house” Media anchors spoke about this 7) House values collapsed, but interest rates rose 8) Government solution is “loan modifications” — why the heck loan mods? Contract “loan mod” – with WHO?? The non-bank origination is gone. Contract with them – GONE. 9) Government does settlements with big banks – investigations shut down. Loan mods urged more, but most denied. Borrowers TRAPPED. 10) Government keeps interest rates down – artificially. 11) Markets propped up – artificially by low interest rates- corporation love that – all after THESE banks and corporations charged HIGH interest rates. 12) CA began the crazy court decisions that carried across the country – that is the way is always is. 13) These are all “default debts” before anyone even defaulted. 14) Discovery is rarely granted in court (Neil must get the discovery BEFORE one goes to Court, but Neil must trace the entire chain from the very beginning). Hope you can do that Neil. 16) No money trail disclosed if you are paying, Who the heck knows where your money is going.

    Right to not pay — I have been there — pay wrong party — dead meat.

    “I don’t have to see it, Dottie, I lived it.” Thanks Pee Wee —

    Thanks everyone.

  2. John Reed- I, like many others I’m sure, are infuriated by the exact same thing-that the presentation carries more weight than the facts.
    Look at it this way : your success as an attorney will be directly related to how much your suit and shoes cost, what brand watch you are wearing, and how lavishly your office(s) is designed and furnished.
    If you take the same attorney and seated him behind a card table wearing cut off shorts and a baseball cap, he’d be hard pressed to command any type of fee whatsoever.
    The fact that any attorney anywhere could defend mortgage servicers and banks during foreclosure proceedings knowing full well that what they have done is illegal, is disgusting., absolutely reprehensible.
    There was a website ( forgot its name) which was shut down 5-6-7years ago that tracked “foreclosure suicides” nationwide, but at the time they shut down they had compiled over 40,000 such suicides. It is my contention that the attorneys/law firms who handled the foreclosures be charged with murder or manslaughter, jailed, and be forced to compensate the surviving family members through their insurers as well as disgorging all revenue ( not just profits) from all foreclosures.

  3. Judge: “You haven’t paid your mortgage for 8 years and you’re a victim?!!”

    Me: “It’s more like 10, but I’m only a victim when you let them steal my house!”

  4. My Judges are not calling balls and strikes they are pitch hitting for the lawyers on the other side in and out of court and signing orders the opposing lawyers compose for them to sign. It is a farce

  5. Our judges should be more concerned with fact than with presentation techniques. The person without public speaking training, the shy, the disabled, the homeless and now can’t find a free bath or clean clothes… are these no also American’s who deserve equal justice? Is our system really just a method of depriving those who can least afford it so that they aren’t able to produce a compelling argument in a court? As an American… I am insulted to think that a proper presentation should outweigh fact. And should I have a voice in that legislation… I would make it a legal mandate that FIRST all is judged on the facts.

    To quote one of my favorite ole authors Robert Heinlein:

    “What are the facts? Again and again and again – what are the facts? Shun wishful thinking, ignore divine revelation, forget what “the stars foretell,” avoid opinion, care not what the neighbors think, never mind the unguessable “verdict of history” – what are the facts, and to how many decimal places? You pilot always into an unknown future; facts are your single clue. Get the facts!”

    ― Robert Heinlein

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