Don’t Admit Anything About the Servicers Either — It’s All a Lie

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Homeowners often challenged the authority of the named claimant while skipping over the actual party who is supporting the claim — the alleged servicer.

You might also want to challenge or at least question their authority to be a servicer. The fact that someone appointed them to be a servicer does not make them a servicer.

Calling themselves a “servicer” does not constitute authority to administer or even meddle in your loan account. As you will see below the entire purpose of subservicers is to create the illusion of a “Business records” exception to the hearsay rule without which the loan could not be enforced. The truth here is stranger than fiction. But it opens the door to understanding how to engage the enemy in trial combat.

That “payment history” is inadmissible hearsay because it was not created by the actual owner of the record at or near the time of a transaction and the actual input of data is neither secure mor even known as to author or source. Likewise escrow and insurance payment functions are not authorized unless the party is an actual servicer. The fact that a homeowner reasonably believed and relied upon representations of servicing authority is a basis for disgorgement — not an admission that the party collecting money or imposing fees and insurance premiums was authorized to do so.

PRACTICE NOTE: However, in order to do this effectively you must be very aggressive in the discovery stage of litigation. (1) ASK QUESTIONS, (2) MOVE TO COMPEL, (3) MOVE FOR SANCTIONS, (4) RENEW MOTION FOR SANCTIONS, (5) MOTION IN LIMINE AND (6) TIMELY OBJECTION AT TRIAL.


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To be a “servicer” the company must received the appointment to administer the loan account from someone who is authorized to make the appointment. A power of attorney is only sufficient if the grantor is the owner of the debt — or had been given authority to make such appointment from the owner of the debt.
A person who is authorized to make the appointment is either the owner of the debt by virtue of having paid for the debt or an authorized representative of the owner of the debt by virtue of having paid for the debt. This is a key point that is frequently overlooked. By accepting the entity as a servicer, you are impliedly admitting that they have authorization and that a true creditor is in the chain upon which your opposition is placing reliance. In short, you are admitting to a false statement of facts that will undermine your defense narrative.
If the servicer is really authorized to act as such then your attempt to defeat foreclosure most likely fails because the case is about a real debt owed to a real owner of the debt.
The fact that they allege that they maintain records may be a true or false representation. But whether it is true or false, it does not mean that they had authorization to maintain those records or to take any other action in connection with the administration of the loan. Of course we know now that any such records are composed of both accurate and fabricated data.
We also know that the data is kept in a central repository much the same as MERS is used as a central repository for title.
The representations in your case about and intensive audit and boarding process most likely consist of fabricated documents and perjury. There was no audit and there was no boarding process. The data in most cases, and this probably applies to your case, was originated and maintained and manipulated at Black Knight formerly known as Lender Processing Systems.
Contrary to the requirements of law, the central repository does not ever handle any money or payments or disbursements and therefore does not create “business records” that could be used as an exception to the hearsay rule. The same thing applies MERS. These central repositories of data do not have any actual role in real life in connection with any financial transaction. Their purpose is the fabrication of data to support various purposes of their members.
All of this is very counterintuitive and difficult to wrap one’s mind around. but there is a reason for all of this subterfuge.
From a legal, accounting and finance perspective the debt was actually destroyed in the process of securitization. This was an intentional act to avoid potential risk of laws and liability. But for purposes of enforcement, the banks had to maintain the illusion of the existence of the debt. Since they had already destroyed the debt they had to fabricate evidence of its existence. This was done by the fabrication of documents, recording false utterances in title records, perjury in court and disingenuous argument in court.
The banks had to maintain the illusion of the existence of the debt because that is what is required under our current system of statutory laws. In all 50 states and U.S. territories, along with centuries of common law, it is a condition precedent to the enforcement of a foreclosure that the party claiming the remedy of foreclosure must be the owner of the debt by reason of having paid value for it.
The logic behind that is irrefutable. Foreclosure is an equitable remedy for restitution of an unpaid debt. It is the most severe remedy under civil law. Therefore, unlike a promissory note which only results in the rendition of a judgment for money damages, the Foreclosure must be for the sole purpose of paying down the debt. No exceptions.
The problem we constantly face in the courtroom is that there is an assumption that there is a party present in the courtroom who is seeking restitution for an unpaid debt, when in fact that party, along with others, is seeking revenue on its own behalf and on behalf of other participants.
The problem we face in court is that we must overcome the presumption that there was an actual legal claim on behalf of an actual legal claimant. Anything else must be viewed through the prism of skepticism about a borrower attempting to escape a debt. The nuance here is that the end result might indeed be let the borrower escapes the debt. But that is not because of anything that the borrower has done. In fact, the end result could be a remedy devised in court or by Statute in which the debt is reconstituted for purposes of enforcement, but for the benefit of the only parties who actually advance money and connection with that debt.
More importantly is that nonpayment of the debt does not directly result in any financial loss to any party. The loss is really the loss of an expectation of further profit after having generated revenue equal to 12 times the principal amount of the loan.
While there are many people who would argue to the contrary, they are arguing against faithful execution of our existing laws. There simply is no logic, common sense or legal analysis that supports using foreclosure processes as a means to obtain Revenue at the expense of both the borrower and the investor. And despite all appearances to the contrary, carefully created by the banks, that is exactly what  is happening.

12 Responses

  1. YES. Regardless of who the owner or holder of the note is, if the servicer is providing the evidence, they must have a Power of Attorney. Otherwise they have no standing to do anything and there is no proof you have any obligation to pay them on behalf of the note holder.

  2. I have had the pleasure of speaking to Mr. Dan Schramm on many occasions. It is unfortunate that he is not a judge. His knowledge of laws concerning Trusts and other legal issues is spot on. I would put him up against any attorney that either opposes or defends foreclosures.
    Just my thoughts and respect for this gentleman

  3. Dan.
    Would that also be the case for a servicer trying to steal a house as Plaintiff on behalf of Freddie Mac ???? Do they need a POA from Freddie too ???

  4. It would be grounds to oppose the Motion for Summary Judgment (MSJ) in a judicial foreclosure. In a non-judicial state you have to bring a civil action as the plaintiff. The PofA would have to be introduced when the defendant bank/servicer filed a MSJ or at trial.Without the PofA the servicer’s evidence/exhibits/testimony is inadmissible hearsay. The servicer is an agent and must prove agency. Agency is proved from the mouth of the principal, not the mouth of the agent. A MSJ is normally defeated by a dispute of material facts, but it can also be defeated if the exhibits in support of it are not admissible as evidence.

  5. Dan,

    What happens if the Servicer does not provide the Power of Attorney Motion for Summary Judgment? POA should also be included when there is a non-judicial foreclosure as well, right?

  6. Brian, the county where my property is located – I was surprised to actually find it – actually by mistake – looking for all docs with Option One Mortgage Corp, Citibank (Trustee) and Merrill Lynch . . . as these were the parties found in the Prospectus. Option One Mortgage Corp was our lender and then Citibank appointed them a Servicer. But the POA expired one year from the date of recording or sooner if sold, bankrupt, transferred, etc.

  7. @ postyourdocs

    I guess what I’m asking is WHERE did you find it? The county where your property is located? A county where the servicer is located .. the “lender” is located…

  8. I have been writing about this stuff for years. In the case of REMIC trusts which most notes were sold into prior to 2008, the Trustee has nothing to do with collecting payments or foreclosures. The servicer is foreclosing in the name of the trust which never actually appears in the case. The Servicer must have a Power of Attorney and I have found that in 50 percent or more of judicial foreclosures they never introduce the power of attorney with the Motion for Summary Judgment or at trial. Most overlook the fact that the servicer as an agent must have its own standing and only the principal can provide that. Otherwise the borrower has absolutely no legal obligation or duty to pay the servicer a cent. There is nothing that creates any actual legal duty to the servicer prior to foreclosure and there is no such duty if there is no power of attorney. Generally the servicer is not a party to the trust either. I do disagree on one thing. The note is not destroyed by securitization as it is an asset that is deposited into the trust vehicle owned by the investors. The Trustee only has “raw legal title”. The Trustee issuses the security certificates back to the Depositor which is the last legal entity to actually own the notes, who then sells them to investors. Servicers also are NOT working for the Trustee whose only duty is to pay investors. The real party is the Master Servicer who always is hidden in the background.

  9. Searched for an Option One “Power of Attorney” close to the date of the trust/pooling and service agreement online county rec search and then took the found book and page numbers and went to the county recorders office and looked them up and one matched my trust name,MLMI TRUST ASSET BACK SEC 2007-HE2 dated March 1, 2007. Used a notebook and it took a few hours.
    POA was recorded approx a year later on 4-25-2008. Interesting that Citibank is the pooling and service Trustee, yet they are an unknown party at closing /loan docs as well as many other unknown hidden players who benefited from our loan. And now I am fighting to get a POA from the new debt collector PHH using fair debt collection laws.

  10. @ postyourdocs

    How did you find the original POA between Citi and OOMC?

  11. I’m looking into how Bank of America NA transferred Servicing to Bank of America Home Loans (a different entity)(Countrywide???)
    switching account number and then took back Servicing from Bank of America Home Loans 2 years later and this time not switching account number or assignments of mortgage ?????????

    But of course I’m told by every attorney. AOM does not matter. WTF!!!!

  12. I found the original recorded Citibank to Option One Mortgage “Power of Attorney” with our ABS name. It clearly states that it terminates one year from the date or earlier if the loans are transferred or the Servicer is in bankruptcy. It also states the Trustee shall execute and deliver a replacement power of attorney. Ocwen, who is now the servicer, has so far been unable to provide this information, which is not surprising. And, Citibank, was an unknown party (hidden) in our home mortgage documents.

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