Does Discovery Invite Fraudsters to Invent Backdated Documentation of Nonexistent Transactions?

I have divided the rules of evidence into two categories that are useful to homeowners seeking out a judgment or final order in their favor.

The two categories are primary evidence of a claim against the homeowner and corroborative evidence in support of the primary evidence. The banks want you to attack the primary evidence. I want you to attack the corroborative evidence.

The primary evidence is the case AGAINST the homeowner.

The attack on the corroborative evidence is the case FOR the homeowner.

The unfortunate truth about our judicial system is that anyone can win a completely fraudulent claim if they work the system correctly. But it is also true that anyone can successfully defend against a claim even if it is not fraudulent. 

The first category is primary evidence which is probably not what you’re thinking. Primary evidence is any document or testimony which on its face asserts the truth of the matter asserted. In foreclosure, the matter asserted is that the proceedings have been initiated on behalf of a claimant who has paid value in exchange for ownership of an unpaid debt owed by the homeowner to the claimant.

Examples of primary evidence that are currently used in foreclosure cases by lawyers representing Foreclosure Mills include assignment of mortgage, allonges that purport to endorse a promissory note, a copy of a promissory note, and payment histories that purport to establish a loan account receivable and its status.

Primary evidence consist mainly of an anchor from which the lawyer for the claimant will claim that he or she is entitled to the application of a legal presumption arising from the facial validity of the testimony or the exhibit.

So if the exhibit says for example that it is “for value received”, the court will ordinarily assume that value was received. Inherent in this presumption is the idea that there was something to buy and that something was sold. This reinforces the idea that the transaction with the homeowner was in fact a loan and that this loan was in fact sold into the secondary market and was securitized.

In the absence of any affirmative defense, denial, counterclaim or objection from the homeowner, the primary evidence establishes the prima facie case for the claimant, which means that the Foreclosure Mill is entitled to a foreclosure judgment or an order in allowing the foreclosure sale to proceed, following which there will be an eviction or writ of possession.

Defending against such claims is as much an art as it is the application of skills learned through education, experience and practice.

The typical layman approaches the case as a conflict between right and wrong. The experienced practitioner approaches the case as an opportunity to work the system. On Defense, the practitioner seeks mainly to discredit the case brought against his or her client. The successful practitioner does not try to overshoot by attempting to plead and prove facts supporting the idea that the entire securitization scheme is mostly or entirely a Ponzi scheme.

So the successful practitioner attacks the prima facie case by attacking the ability of the claimant to provide corroborative evidence for the facts that are currently presumed. Pursued successfully, this leads to an inevitable result: the Foreclosure Miil is unable to produce any of the corroborative evidence. And this is because no transaction ever occurred. You don’t need to believe that proposition; you only need to use it so that you can win.

But some people question the viability of pursuing a strategy that is based mostly on the pursuit of discovery demands on the grounds that it will only lead to the production of more fake documents.

That is possible but a real loan file will include an accounting ledger (not just a payment history) and source documents that can be independently confirmed. So if they are claiming to have made an entry on the general ledger that says we paid for this loan and now we own it as an asset, then there will be one or more source documents and corroborating documents that show that to be a true memorialization of what happened.

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In this instance, it would mean that they had a canceled check or confirmation of ACH or wire transfer together with corroborating documents showing an agreement for purchase and sale of the underlying obligation as required by Article 9 §203 UCC, adopted in all U.S jurisdictions verbatim.
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This is the reason why they will refuse to respond to timely and proper discovery demands even in the face of a court order requiring them to do so. Some fairly sophisticated pro se litigants get right up to the line where they could snatch victory from the jaws of defeat, only to be faced with a final order granting the foreclosure. This is because they were unaware of the requirements for establishing a bar to the Foreclosure Mail introducing any evidence of the existence, ownership, and right to administer, collect or enforce any alleged debt.
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I have identified the procedural mistake as one in which the homeowner fails to ask the court to bar such evidence in a motion for sanctions or a motion in limine. The mistake occurs because the homeowner believes that the unanswered questions together with lack of compliance with court orders is sufficient for the court to simply enter a judgment or final order in favor of the homeowner. A similar mistake is often made by inexperienced trial lawyers who fail to proffer a motion to strike after their objection is sustained.
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Neil F Garfield, MBA, JD, 74, 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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3 Responses

  1. The key evidence is on top, as always. People just don’t look at it.

    Its in your “Mortgage” instrument – which Wall Street Banks carefully designed in the same forward-looking non-binding statements – borrowers SHALL pay or MAY pay. In other words, no mandatory payments are necessary by the borrower who only SHALL or MAY pay

    BUT! in the very middle par. 20 Freddie Mac Mortgage is states “the Note CAN BE SOLD”. The sale might result in change of the Servicer”

    BUT!!!! Don’t miss the main point!

    SOLD! SOLD! SOLD! SOLD! Not gifted. Not Assigned. SOLD.

    And the SALE requires a PAYMENT. And the new “creditor” could collect your payment which you shall or may make IF THE NOTE IS SOLD.

    And $10 recording fees is NOT a valuable consideration

    I am always wondering why Legisman zealously advocate for Wall Street fraud with his erroneous and absurd Court decisions where the main party – The Plaintiff who suffered damages- is always missing.

    20. Sale of Note; Change of Loan Servicer; Notice of Grievance. The Note or a partial interest in the Note (together with this Security Instrument) can be sold one or moretimes without prior notice to Borrower. A sale might result in a change in the entity (known
    as the ìLoan Servicerî) that collects Periodic Payments due under the Note and this Security
    Instrument and performs other mortgage loan servicing obligations under the Note, this
    Security Instrument, and Applicable Law. There also might be one or more changes of the
    Loan Servicer unrelated to a sale of the Note. If there is a change of the Loan Servicer,
    Borrower will be given written notice of the change which will state the name and address of
    -Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3023 1/01 (page 14 of 16 pages)
    the new Loan Servicer, the address to which payments should be made and any other
    information RESPA requires in connection with a notice of transfer of servicing. If the Note
    is sold and thereafter the Loan is serviced by a Loan Servicer other than the purchaser of the
    Note, the mortgage loan servicing obligations to Borrower will remain with the Loan
    Servicer or be transferred to a successor Loan Servicer and are not assumed by the Note
    purchaser unless otherwise provided by the Note purchaser.

  2. Good question Ian. There must be authority to claim holder status.
    In the case of securitized trusts, it is quite specific that the note is held by the trustee (or its custodian) on behalf of security investors. I know many here do not accept the private label securitization for good cause. But, put that aside for the moment and assume the PLMBS functions well. That is not where you will find any note. The trustees are not even represented in courts. In all American law, the trustee is the legal owner/holder of the assets (the notes). That trustee can grant authority to servicers, but they do not because they never held the note to begin with. What we do have is default security administrator trustees. Meaning, the PLMBS were organized without a true loan, and therefore no true note. The consequence is – no authority can be given by claimed trustee to any trust. The servicer’s answer is tack the name of the trustee onto the illegal name of the trust, and hope the court buys it, If they have to — they will produce bogus documents to make their case. Then when they caught that because the trustee says they don’t have it, the servicer will claim they are acting directly for the “investor trust.” Who in the investor trust gave them any authority? The problem with corroborative evidence is getting there before the judge grants MTD any challenge – which is usually done very quickly or with little review of borrowers claims.

  3. Legisman, what gives a person the right to claim holder status, and who confers that right? Or do they just claim the right? This has always confused me, pls explain

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