How to use your knowledge of securitization to win foreclosure and quiet title cases

In an effort to show the relevancy of securitization in the collection businesses established with each new transaction with homeowners, I have had some discussions about the usefulness of knowing who has access to funds paid by homeowners and who gets paid any money as a creditor of the homeowner.

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In our example here the servicer is Ocwen, but it could be any one of a dozen or more companies that are named as “servicers but who do not receive payments nor distribute money to investors or creditors.

  • Homeowner payments by check are sent to a PO Box that is in the control of a lockbox provider like FiServ or a depository bank providing lockbox services through a FINTECH company (frequently Wells Fargo).
    • The box is not owned by Ocwen but Ocwen is named as a DBA for the party that owns and controls the box.
    • Ocwen neither deposits the money nor can it access the money.
    • Its records showing payments and payment history are based upon reports FROM Fiserv who is operating under contract not with Ocwen but with an intermediary for the investment bank bookrunner.
    • Testimony from an Ocwen representative is hearsay on hearsay. It is excludable from evidence if a timely and proper objection is raised.
  • Homeowner electronic (EFT) payments (ACH, auto withdrawal etc.) are directed to an account owned and operated by the FINTECH company just like the paper check payments. The account is owned by Fiserv and maybe CoreLogic dba Ocwen.
    • Ocwen neither deposits the money nor can it access the money.
    • Its records showing payments and payment history are based upon reports FROM Fiserv who is operating under contract not with Ocwen but with an intermediary for the investment bank bookrunner.
    • Testimony from an Ocwen representative is hearsay on hearsay.
  • Homeowner correspondence and legal notices (QWR, DVL etc) are directed to another PO BOX that is owned and controlled by a FINTECH company running algorithms based on artificial intelligence producing stock answers to every letter. Once again this company is dba Ocwen. Things that don’t fit within the knowledge or programming of the server processing correspondence and notices are discarded.
    • No human hands or minds are involved in the receipt or processing of correspondence or notices from the homeowner.
    • Generally, no signature is attached to any of the correspondence, notices, or statements sent out under the Ocwen letterhead.
    • Ocwen knows nothing until foreclosure is initiated at which point Ocwen receives instructions and access to a limited set of data prepared for use in court by a FINTECH company who may or may not be the FINteCH who received and processed incoming homeowner payments.
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The importance of all of this is that under the rules of civil procedure and the laws governing the definition of evidence Ocwen is irrelevant if it is not receiving the payments, processing them, and inputting data into an accounting ledger reflecting their receipt of the funds.
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Unless an officer of the FINTECH company testifies that they processed the transaction, noted the receipt of payment, and produced a report for publication by Ocwen, there is (a) a lack of foundation to Ocwen representative’s testimony and (b) a very clear path to excluding Ocwen robowitness testimony without which no exhibit can be introduced.
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There are two ways of attacking this. One is to issue a subpoena duces tecum to the FINTECH company and the other is to have the information already in hand. Caution: the FINTECH company gets very touchy when they are contacted directly by a homeowner.
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But best practices in litigation would be to issue the subpoena while at the same time the lawyer is compiling evidence of who is performing what function — and therefore who could produce a business record showing what functions they performed.
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The indemnification agreements between the servicers, FINTECH, and other vendors on the one hand, and the investment bank bookrunner on the other hand expressly state that nobody needs to get involved including but not limited to the servicer (e.g. Ocwen), the REMIC Trustee and the FINTECH company. FINTECH will not get involved in testimony or the introduction of exhibits as evidence.
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If we can show that the named servicer is not receiving the funds, not disbursing the funds, and not processing funds then we can bar any “business record” as excludable under the hearsay rule even if the information on it is true. Barring the testimony of the robowitness forces the issue.
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The result is
  • voluntary dismissal without prejudice.
  • An involuntary dismissal with prejudice
  • Judgment entered for the Homeowner.

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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE COMMENTS ON THIS BLOG AND ELSEWHERE ARE BASED ON THE ABILITY OF A HOMEOWNER TO WIN THE CASE NOT MERELY SETTLE IT. OTHER LAWYERS HAVE STRATEGIES DIRECTED AT SETTLEMENT OR MODIFICATION. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

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If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.

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