Consent Order Contains Admission of False Affidavits and False Chains of Title

A lot of student loan debt ends up being claimed by “Trusts” that are exactly like REMIC trusts except they are not about residential mortgages. And as I have previously pointed out on these pages, the enforcement of those debts has gone through the same process of removing the risk of loss from those who made the loan and the creation of a scheme where it is perhaps impossible to find or identify any creditor who owns the debt by reason of having paid for it (as opposed to “owning the debt” by reason of having the promissory note or a copy of it).

As a side note, to the extent that debtors are prevented from discharging such debt because of government guarantees, I argue that such exclusion is inapplicable. Students should be able to discharge most student debt in bankruptcy. The risk has already been eliminated if the loans are subject to claims in securitization. The purpose of the guarantee has thus been eliminated.

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Hat tip to summer chic

In this case, the CFPB filed suit essentially asserting its own administrative findings that mirror the defenses of homeowners in foreclosure, to wit: that the affidavits filed are false, and they are falsely signed and notarized, containing false information about title to the loan and false information about the business records.

What is interesting about this case is that the parties are submitting a consent order which includes as those findings of the court in paragraph 4 of the proposed consent order which states as follows:

See https://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_proposed-consent-judgment.pdf

4. Since at least November 1, 2012, in order to collect on defaulted private student loans, Defendants’ Servicers filed Collections Lawsuits on behalf of Defendants in state courts across the country. In support of these lawsuits, Subservicers on behalf of Defendants executed and filed affidavits that falsely claimed personal knowledge of the account records and the consumer’s debt, and in many cases, personal knowledge of the chain of assignments establishing ownership of the loans.In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections lawsuits without the documentation necessary to prove Trust ownership of the loans or on debt that was time-barred. Finally, notaries for Defendants’ Servicers notarized over 25,000 affidavits even though they did not witness the affiants’ signatures.[e.s.]

PRACTICE NOTE: HOW TO USE THIS INFORMATION. Sometimes I erroneously assume that people know what to do with this type of information. So let’s be clear.

  • This information means that servicers, subservicers and lawyers claims regarding chain of title, business records, and their use of affidavits or even testimony is not entitled to the same presumption of credibility that might otherwise apply.
  • That means that the presumptions on the use of business records are not entitled to a presumption of credibility and that additional foundation testimony must be offered in order to assure the court that what is contained in the document is authorized, properly signed, properly notarized and most importantly accurate.
  • The entire case against debtors in these situations is entirely dependent upon the use of legal presumptions  that can be rebutted. Rebuttal of presumptions takes place under two general categories.
  • The first is that that the presumed fact can be shown to be untrue.
  • The second ius that the process of presumption should not apply because the proponent of the document clearly has a stake in the outcome of litigation and has a history of falsifying such documents.
  • Once you rebut the presumption, the case against the debot (homeowner, student) is gone.
  • The opposition has no evidence of proof of payment for the debt, and this has no foundation for claiming authority of the servicer, trustee or even the lawyer.
  • Such authority must come from the owner of a debt who has paid value for it.

Dan Edstrom senior forensic loan examiner writes the following:

This is similar to what is in the foreclosure review consent orders (from US Bank Consent Order dated April 13, 2011):
(2) In connection with certain foreclosures of loans in its residential mortgage servicing portfolio, the Bank:​
(a)​ filed or caused to be filed in state and federal courts affidavits executed by its employees making various assertions, such as the amount of the principal and interest due or the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits that were not properly notarized, including those not signed or affirmed in the presence of a notary;​
(c)​ failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and​
(d)​ failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.​
(3)​ By reason of the conduct set forth above, the Bank engaged in unsafe or unsound banking practices.
And what about this quote from the student loan consent order:
In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections​ lawsuits without the documentation necessary to prove Trust ownership of​ the loans or on debt that was time-barred.
So wait a minute. They allege the debt cannot be discharged in BKR, but (alleged) student loan debt that hasn’t been paid on in years – isn’t it time barred?  How does collection action work after decades where they took affirmative debt collection steps after the debt was time barred?  In the instance I am thinking about, a dentist was BARRED from taking patients with some type of federally covered insurance and this forced them out of their occupation.  The student loan debt hadn’t been paid in 2 or 3 decades (in California).
So in a related case (time-barred debt) in BKR in CA, a debtor filed a lawsuit against a creditor for filing a proof of claim on a time-barred debt. He lost, the court ruled that if the proof of claim was not objected to (with the relevant objection being that the debt was time-barred), the debtor waived the affirmative defense.

11 Responses

  1. smile back – Don!!

  2. I know a few great attorneys, but the rest aren’t even using any wattage.Like Watt is the real question to ask? Watt is the correct jurisdiction? To that I would add, perhaps judges should not be allowed to have pension funds invested in Investment Banks.

    Thank you again for watt you replied.(smile)

  3. DON ST CLAIR – when the loan left F/F to PLMBS — by manufactured defaults, some insurance likely kicked in. That is the transaction that must be completely examined. You will see fake discharge on this prior transaction – must scrutinize it. This may also affect “purchases” – not just refinances. When the crisis hit – there was government bailout – as insurers could not pay. Much of the “debt” or fake securities, were sold off to debt buyers by the government. You would not see a satisfaction recorded then. What we should have seen was an admission from the government that the “debt” was always “default” and charged-off, before there was any actual default by the borrower. We did not see this because the government feared a financial meltdown if all exposed. Debt buyers were always involved, and debt buying is the biggest business in the world.

    What we should see now — is the real CURRENT party coming from behind the curtain when they claim foreclosure. I have sent input to CFPB on this regarding the FDCPA. The FDCPA does not use the word “Current” – it just saws – “to whom the debt is owed.” Adversaries actually told me they do not have to disclose the CURRENT party because FDCPA does not say “current.” If current party is disclosed then Homeowner would then be able to challenge – how did collection rights get to you? They could trace all the way back, and, would also be able to directly negotiate with that party. But, the court just continues to accept bogus documents to conceal the fraud.

    I have not decided yet whether the courts are just stupid (my lawyer friends admit to me that lawyers are not the brightest bulbs – they are good at conning – and recall Enron – financial engineering (off balance sheet CONDUITs) were devised because they knew courts would not figure it out)), or just too supportive of “banks,” or whether they are just being told what to do. I know some here are very strong against the judges. And, I feel that is justified as the courts are obligated to uphold the law, allow discovery, and are supposed to be impartial. Clearly, that is not the case.

    I understand the government wanted to prevent a financial meltdown, but it should not be at the expense of the victims. I do not understand why no one in Congress is helping. Cannot get to any representative in any state, including my own, to help. All ignore. I know, however, that some people are working very hard on this. We will eventually get there but with too many victims along the way.

  4. But Anon, hasn’t the insurance written off or paid the actual debt? And collectors without a HDC? Satisfaction of Debt should show up somewhere.

  5. don st clair – insurance was paid out. And, collection rights sold by GSEs. Repackaged by banks – who falsely claimed securitization but without valid asset securitization. That is the falsity. But, does not matter as to insurance collection as to debt collection rights. It does matter as to disclosure of the party attempting to collect.

  6. Question: If a loan is foreclosed or goes to a collector, isn’t the loan already claimed as an insurance loss…This could be a defense as far as I can see by adding and creating havoc to their claims of damage.

  7. Oh – Storm — now called “collectors?” Thought they are “creditors” according to you. Look — I know students who WANT to pay the student loan from many years ago — and it can’t be located – despite “debt collectors” claiming rights. Can’t be validated — can’t actually be located or how it got to a debt collector. Servicers are most often – debt collectors. .

    If anything goes to a debt collector – and “servicers” they are — you better know who is the CURRENT creditor. It is that simple. But, not so easily disclosed to ANYONE – including courts.

    Derivatives anyone? It will kill our economy if disclosed. That is why it is NEVER disclosed. Derivatives are contracts – not securities. Debt buyers hide behind the curtain. You pay — will never be accounted for. Why? Never disclosed. No balance sheet accounting – unless you have a complete chain of debt collection “assignment.” There is no note “negotiation” with debt collection assignment.

    Not a note — just debt collection assignment. Famous tactic is to avoid FDCPA by naming the original creditor and not the current creditor. Don’t fall for it — FDCPA says — “To who the debt is owed” – not to whom the debt “was owed.” Debt collectors don’t care. CFPB knows this — let’s see how they revise the law (now under advisement).

    So if Joe down the street claims to be “debt collecting” — you better check with Joe how Joe got the debt collection rights.

    I have seen “debt” paid only to show up again on credit reports – and as currently delinquent. Unfortunately, it will be too late for FDCPA then — FDCPA has one year SOL.

    Debt collection — biggest business in the world. You pay — you lose – unless all is validated to the hilt. And, “servicers” simply will not do.

    Storm — you just appear o be out of the “loop” – or working for inside the loop.

    And, bankruptcy — find an attorney who will challenge it. They don’t care — they just want to be paid.

  8. Good topic Neil in my own BK chapter 13 WF attorney did what you described above, I ended up in a big disagreement with my own counsel having to write on my own to the Judge and the authorities. They Misrepresented the Secure Creditor BANA without any declaration from employee from this institution, the Atty filed documents as evidence to support his Objection to my BK 13 plan I reported it 2 years ago as Fraudulent to the local and state authorities.

  9. And BTW, federal student loans don’t fall under the statute of limitations on debt. If you have federal student loans, there’s never a time after which collectors are unable to sue you to collect.

  10. We analyze student loans as well.

    BTW, the only way to win in bankruptcy is to be able to comply with the Brunner test.

  11. Good job Summer.

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