A report is not a record. It is a statement made about a record and it is by definition a statement made out of court by often unknown persons. That means it is at least hearsay and probably lacking in the foundation since the person who made entries from which the report was generated is unknown and cannot be questioned.
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The first type is the one we all see in court cases and even nonjudicial foreclosure cases. They are reporting documents. They memorialize a transaction. That means they say that the records show that a transaction happened. That is exactly why you ask for the records — not the reports — when you submit discovery demands.
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The primary report they seek to get into evidence is the payment history. As previously detailed recently on this blog, the witness who comes to court has no personal knowledge about the payment history and neither does the company he/she purports to be appearing for a “servicer” or “attorney in fact.” The biggest mistake of homeowners or their attorneys is when they allow that payment to be submitted as evidence without vigorous objection. By allowing it as evidence the court has deemed it a record even though it is not a record. Worse yet, it will e treated as not just a payment history record, but also a record of the loan account receivable.
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So by allowing the payment history into evidence by failure to timely object (and hopefully previously by motions for sanctions based upon discovery and thence motions for negative inference and motions in limine) the homeowner has admitted the following:
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The loan account receivable exists
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The loan account receivable is portrayed on that report
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The amount promised is shown on the payment history report
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The amount due is shown on the payment history report
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The witness has personal knowledge and familiarity with the way the report was generated.
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The report was generated from records kept by the employer of the witness
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The report is a complete “record” of all transactions relating to the alleged loan receivable account as represented on the payment history report.
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All payments have been properly accounted for and entered by competent trained personnel at or near the time of their receipt.
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All disbursements have been properly accounted for and entered by competent trained personnel at or near the time of their payment.
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NONE OF THOSE THINGS ARE TRUE IN FORECLOSURES SPONSORED BY INVESTMENT BANKS WHO DO NOT APPEAR ON THE CORUT RECORD AND THEREFORE CANNOT BE DIRECTLY SANCTIONED FOR PRESENTING FALSE AND FRAUDULENT INFORMATION.
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THE NEXT SET OF REPORTS ARE PRESENTED AS THOUGH THEY WERE COPIES OF THE RECORDS. This includes all other documents upon which the foreclosure mill relies to obtain a foreclosure sale.
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And there are various rules about when and how to treat what they say as either true, false, or simply inadmissible in court. Examples include mortgages, assignment of mortgage, endorsements of notes, allonges, and so forth. Those “documents” basically report that someone paid value for the underlying debt, or the note, or the mortgage.
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The important thing about reporting documents is that by looking at them you can’t tell if anything on them is true or false. And by getting a copy of them you have no idea who has the original, although at the time of foreclosure in court the attorney will state he/she has them in a vault or in the file. The question of how those documents were created, prepared, maintained, held, transferred, and delivered is rarely raised and the lawyer is protected by litigation immunity for anything that might be misleading the court.
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None of the documents used in foreclosures today are admissible under the rules foe evidence. There are no exceptions. But people keep finding excuses to do so anyway, and the chief way that is accomplished is by sliding it past the homeowner or the lawyer who thinks that the “document” accurate depicts real transactions between the homeowner and the “servicer” none for which actually happened but neither the homeowner nor the lawyer usually understands that defect.
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The second type of document is the one you never see now but you always saw before. They are the original documents on which entries were made on the ledger of a company accompanied by a canceled check or wire transfer or ACH receipt. This means that the bookkeeper or VP of loans at a financial institution literally made a deposit of money into a loan account that can be identified. If these things do not exist, then any report that they do exist is untrue. And what I am saying is that in the context of securitization this never happens because the securitization players do not want and do not create or maintain a loan account even though you thought and perhaps still think otherwise.
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So if, to make it simple, you have a canceled check from a party made payable to the homeowner and deposited into a financial account in the name of the homeowner you have the beginning of a loan. But you don’t see that anymore on any report or record preferred in court even though that is exactly what the law requires. Instead Wall Street has convinced everyone to accept the reporting documents as though the accounting entries were made. But they never, ever show those accounting entries.
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So in practice, the use of reporting documents works up to a point. They are presumed valid until challenged. But as soon as you ask for the original documents or even copies of the original documents you will never get it. Before the era of securitization, the courts would only accept original records. Now they accept only reporting “documents” even if you have discovery demands outstanding for the original records.
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The reason for the absence of accounting or original documents is simple. The securitization players had to avoid any loan account when they sold securities because if they owned a loan account they would be accused of selling the same loan over and over again. Instead, they sold securities representing performance data bets on nonexistent loan accounts as reported in the sole discretion of the investment bank who was operating under the fictitious name of the REMIC trust.
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You win when you demand the original documents. You lose if you are arguing over the reporting documents.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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