Preface: When I received my extended MBA degree with the highest honors, I also taught and tutored other students in accounting and auditing.
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I recently received a response sent by SPS as the “servicer.” note again that SPS is owned by Credit Suisse, a commercial and investment bank located offshore. The homeowner was understandably confused. There was a reference to an “account history” but no reference to an “account” or “loan account.”
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Note that the SPS response specifically refers to an “account history” from Chase as a former servicer but offers no clue as to the whereabouts, ownership or any copies of the account itself. And to educate you a little on the difference, consider this:
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The account history is the publication of a report generated by or for a servicer. it is not the entire loan account that would show debits and credits for each and every transaction affecting the account balance. Each such debt and credit is a data entry.
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Behind each data entry, there must be a reason for making it. In normal business, the reason is a receipt for some transaction that generated both a debit and a credit. I have written about this. So for example, if a payment was received in cash there would be a credit to the cash account and a debit to the loan receivable account in exactly the same amount.
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This double-entry bookkeeping system is the exact reason why we use the reference to “balanced books.” Under this system, it is always true that if all transactions are recorded, assets=liabilities+stockholder equity. When you look at “Balance Sheets,” you see “assets on the left side and “liabilities + stockholders equity on the right side.
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There are always two entries for each transaction. It occurs in two different accounts on the same side of the ledger or two different entries divided between the left and right side — each in exactly the same amount. In court proceedings, discovery demands should be directed at these entries and the receipts or other foundation documents that justified the recording of an entry in “assets,” or “liabilities,” or “equity.”
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Let’s take another example and it was the first reason why I knew that the “servicers” were not receiving payments as everyone thinks is happening. If a servicer receives a payment instead of the creditor, it will have a credit to cash and a credit to liabilities under an account that says or means “payments due to creditors.”
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In turn, when the payment is made to creditors, the “payment due” account (accounts payable) receives a debit for the amount of the payment, and the cash account receives a debit for the amount of the payment that went out to a creditor.
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When you ask for a copy of the ledger showing debits AND credits from either the designated creditor or the designated “servicer,” you won’t get them because they don’t exist. The payments did not go to the servicer or the creditor, even if a third party made the collection using the name of the servicer.
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The reason is that there is no creditor because there can be no creditor if there is no loan account receivable carried as an asset on the ledgers of the designated creditor. The payment history or account history is merely a report on a report generated by third and fourth parties about your behavior. That is not admissible evidence unless it is offered into evidence and the homeowner fails to object.
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The payment history is an allegation about your behavior, not the designated creditor’s behavior. The behavior of the “creditor” is crucial: if there is no creditor who suffered a default, there is no right to announce a default and no right to attempt enforcement of a virtual debt.
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If there was no creditor proclaiming they suffered a loss, no legal action by the designated creditor is legally permitted. If it were otherwise, anyone with knowledge about your debts could sue you in derogating the rights of a real creditor. Anyone could sue you even if you paid the real debt in full.
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Under modern law, so far, there is no allowance for enforcing a virtual debt. There can only be enforcement of real debt. And a real debt does not exist because a third party declares it to exist, as happens when a lawyer for a foreclosure mill sends a notice or the “servicer” sends a notice. A debt ONLY exists if the unpaid loan account receivable exists because of a debit to cash or credit to liabilities (accounts payable).
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PRACTICE HINT:
It has always been a puzzle to me why CPAs have not entered the foreclosure defense field as the prime expert witness. Ask any CPA what they need to verify the existence of an asset or liability, and they will tell you.
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After you ask for such things and don’t get it, any CPA would be more than happy to accept your money to write an expert report saying it is impossible to confirm the existence of the loan account without such information. This is the point of discovery — to corroborate or rebut allegations of fact, presumptions of facts, and implied facts.
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That would be a great foundation to ask for evidentiary sanctions in addition to monetary sanctions, to wit: an order barring the lawyer for the foreclosure mill from introducing any evidence at any hearing or trial asserting the existence of the unpaid loan account or any loss implied.
Filed under: foreclosure |
“. . .there is no allowance for enforcing a virtual debt. . .” says it all. Thanks again for article Neil, as always, it was greatly informative. Have a wonderful Thanksgiving; I personally give thanks for Neil!!!
Servicers nothing more than debt collectors for concealed debt buyers – who were concealed at origination. It does not matter what vendor is used. Nothing more than debt collectors for debt buyers who fail to be disclosed. All starts at origination as to crisis claimed loans. FDCPA? RESPA? TILA violations? Yeah — SOL – well – begins when informed. Never informed.
Rushmore Loan Management Servicer has been bought by Select Portfolio Servicer to continue the Shell Game of Debt Debt Collector Fraudclosures stealing American Homes to help keep Credit Suisse Ponzi going …….
Fight Back !!!!!!!