The dirty details of discovery in foreclosure litigation

Posted on April 7, 2021 by Neil Garfield

Defending against discovery demands is a contact sport that most litigators enjoy because they get to torture their opposition — while at the same time learning all about the litigation strategy of their opposition. It is mostly regarded as a win-win situation for the defenders and that especially includes foreclosure mills who in reality don’t even have a client who is a party in the subject litigation (hard as it might be to believe).

I often hear from people who say to me something along the lines of “I did that” or “I tried that” and the judge was just too corrupt and biased to give me a fair ruling. My answer is always the same “What exactly and precisely and specifically did you do and how did you do it?” The answer is usually that the homeowner, usually litigating pro se, but often also the attorney representing the homeowner, failed to execute the defensive strategy in a proper and timely fashion.

One example of this is in discovery where a lay person thinks that if they ask the question they have come up with, there will be grounds for a motion to compel, a motion for sanctions, and a motion in limine or motion for adverse inference or evidentiary sanctions. One look and any experienced litigator will be able to see where they went wrong. And the central issue is clarity and specificity. The lay person thinks they’re asking the right question while they are playing into the hands of the foreclosure mill.

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Let’s take a recent example in which the lay person or their lawyer filed interrogatories and request to produce in discovery during the period of time where the discovery was allowed (timely filed as early as possible, allowing for time to contest the objections raised to discovery).

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The lay person wants to know when and with whom Fannie Mae bought the subject “loan” and to whom it was “sold.” So that is the question they ask. They end up losing the case and blaming the judge or their lawyer claiming corruption and bias. In reality, they were not playing by the rules and therefore they did not achieve their goal.

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So for example, I would say don’t ask for when and with whom the transaction occurred. They are going to refer that straight back to their own fabricated documents. Since they answered your question, there is nothing left to compel. Therefore no motion for sanctions would be possible. There are various stylistic ways of doing it. I would and do phrase it something like the following depending upon how they have phrased other correspondence and statements:
  • Interrogatory: Is it your contention that Fannie Mae has paid value (previously defined in “Definitions”) for the underlying obligation (previously defined in “Definitions”).
  • Interrogatory: Is it your contention that Fannie Mae has received value for the sale of the underlying obligation (previously defined in “Definitions”).
  • Interrogatory: Please identify the person or persons that are the legal custodians of documents relating to any purchase for value or sale for value by Fannie Mae, including their past and current employment, address, phone number and email address.
  • Interrogatory: Please identify the documents (previously defined in “Definitions”) relating to any purchase for value or sale for value by Fannie Mae, including but not limited to any index or file number, with sufficient specificity such that it could and would be produced (upon proper process) without a legal objection as to vagueness or ambiguity.
  • Interrogatory: Please identify the geographical location and address of the place in which the above-referenced documents are stored relating to any purchase for value or sale for value by Fannie Mae, including but not limited to any index or file number, with sufficient specificity such that it could and would be produced (upon proper process) without a legal objection as to vagueness or ambiguity.
  • Request to produce: Please produce for inspection the original cancelled check or wire transfer receipt or other electronic funds receipt for payments to and from Fannie Mae relating to the above-referenced documents.
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The difference between the two wording structures is the difference between night and day. One leads to a bitter loss and the other leads to a very satisfying win (no absolute guarantees here). One leaves no option open for a motion to compel that could be granted and the other leads almost inevitably to the motion to compel being granted even by the most bank-leaning judge.
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And this is why you might have the right idea but you need a trained litigator to write out your discovery demands and plan your attack. Many of these issues will only be resolved by subpoenas for deposition — because the real parties who have access to any such documentation are not named parties in the litigation. So you want to get started in discovery as early as possible.
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The one thing you don’t want and which is often happening is that you have served discovery demands but there is no time left to enforce them.
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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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7 Responses

  1. ANON, on April 7, 2021 at 7:40 pm said:

    Ian and Summer – correct. And, Adam Levitin key expert in years long case against a servicer, and that case is a doosey. Liquidation is what is called. In other words, the loan/note is charged off, liquidated from any prior securitization, and “reinstated” at so called refi or purchase (prior owner problem) by a debt buyer. Even one dollar, according to other experts in the case, can “reinstate” an “debt” — NOT the MORTGAGE loan account number” – as there is no longer a mortgage, as the prior (note to mortgage) has been charged off, and NOT an instrument number as there is no instrument or account receivable. It is simply debt collection – nothing more than a credit card. Which makes the last transaction “note” – NOT negotiable. Fraudulent. How did this happen? Regulators asleep at the wheel, and when they finally realized what had happened, they had to bail-out. Settlements without investigation. The victims? They remain. It is the BOAT story. Five people in a boat. The boat is going to sink, and only one can be saved. Who do you save? The philosophical answer was – the one who could save MORE other people. In the bail-out that one person was decided to be the “banks.” The other four people just drowned. And, no one told us the truth. Let truth be told. Don’t tell me — “well not here – not there” — tell me WHY. And the note? Prove it survives prior charge-off. I have not seen that. Show it to me. That is the private label crisis “account” fake securitization in a nutshell. Why it has not been exposed is beyond me. Courts? They follow the LEADER. Whoever that may be. They do what they are told to do. Compel? You have to demand a lot to compel a lot to get answers. Better luck at a crap shoot gamble. Sorry – it is what it is.

  2. Ian, on April 7, 2021 at 6:35 pm said:

    Summer, good one! “They don’t even need a loan to foreclose. Exactly! These mortgage backed -oops- I meant “mortgage related- securities don’t have any mortgages in them, I think that MERS must have ‘em.
    Professor of law at Georgetown , Adam Levitin, who is arguably one of the top 10 bankruptcy and finance experts in the US, at one point said “ not only are these (MBS) not backed by mortgages, it appears as though they are backed by nothing at all”. He is asked to write so many Amicus briefs (read his bio) because his presence, his knowledge, and his reputation are just about unequalled.
    Also, he’s got a wry sense of humor. You can read his posts on Credit Slips. A blog by lawyers about such things. And some of the comments are hysterical. Well, as hysterical as you’re gonna get.

  3. Ian, on April 7, 2021 at 5:48 pm said:

    ANON- I think one of the clues as to what happened and when is switching the use of the term “mortgage loan account number” and replacing it with the term “instrument number”.
    Whaddya say to that?

  4. Summer, on April 7, 2021 at 5:28 pm said:

    Legisman, they not only don’t need to own a Note, they do not even need a loan to foreclose.

    They come and foreclosure anyway, based on lies and forged documents.

    Examples of HUD’s replies to Senate’s inquiry (submitted on my behalf)

    HUD’s top executive (aka seasoned securities fraudster who defrauded investors and insurers from $5.2 Billion) very carefully worded his respond trying to avoid direct lies to the Senator (but lied anyway when he said that Caliber Home Loan was an “issuer”)

    Here is that this HUD CEO said:

    1. “I reviewed loan history”.

    Well, it does not mention any “loan account receivable” . Where this CEO “reviewed loan history” (hint: all GSEs use Black Knigh’s MSP as a “reliable source of information” )

    2. “The loan was REPORTED to Ginnie Mae”.

    According to Ginnie Mae they purchase loans. Reported and Purchased are not the same.

    3. “The loan began reporting defaulted”

    Loans cannot began reporting by itself, it must be a person who is responsible for bookkeeping and loans accounts receivable.

    Here are no such accounts. Here are no loans. And if you have no loans – no matter if you “own” or not any promissory Note.

    From WHOM you obtained a Promissory Note to claim any ownership to the DEBT? Who is the SELLER of this debt?

    The original legit Owner and the Seller is always missing. From the beginning.

    Nobody can enforce a non existing “debt” – even if Mr. Foley (owner of Black Knight) forge millions “assignments”about non-existing transactions – which he does for a very comfortable living

  5. ANON, on April 7, 2021 at 4:56 pm said:

    Prior “Note” was charged off, before anything was signed. All there is – is debt collection. See what happens after “prior” note is charged off, and then a claimed origination with a claimed new note. Let us know. Thanks.

  6. legisman, on April 7, 2021 at 2:04 pm said:

    None of the questions Garfield suggests are relevant, because you don’t need to own the note in order to foreclose.

  7. ANON, on April 7, 2021 at 10:58 am said:

    The one error in this is that there is a focus on the last transaction. You will have to go to prior transactions for full discovery, and courts will rarely allow that because the foreclosure mills insist only the last transaction is relevant. The last transaction tells you nothing.

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