MSRs are an abbrevation for a false label: Mortgage Servicing Rights. These rights are claimed by companies who eprform no servicing functions and receive no paymetns from heomwoners nor do they make any distributions to creditors. They are in it for the foreclosure, not the accounting and administration.
While there is a certain value in retaining a contract to perform the function of servicing an unpaid loan account, the companies that are self-proclaimed owners of MSRs perform no functions relating to the receipt of homeowner payments or distributions to creditors.
The only company that can be legally recognized as the “servicer” is a company that has been apponte as agent of a creditor who maintains and unpaid loana ccouns ont ehri eldger owed by the homeowner. American law in all US jurisdicitions tells the debtor NOT to pay anyone who ahs not been designated by the creditor to act as their agent — i.e., bookeeper or servicer.
The records of self-proclaimed servicers are pure hearsay and they violate the best evdience rule that can only establish the alleged balance due by (a) foundation testimony from a records custodian of the alleged creditor and (b) production of the account ledger showing the creation, of the unpaid loan account and all debits and credits thereto.
Anytthing less than that is a self-serving report ABOUT the unpaid loan account rather than the account itself.
The current accepted practice of substituting a third party report (i.e., “payment history” violates both the best evidence rule and the hearsay rule — evne if it is totally correct which is never the case.
If lawyers would take note of this they would understand that the advice they are giving clients about not contesting the “inevitable” foreclisure is totally wrong. And it would reveal that my reports about winning cases are both true and subject to corroboration.
The wonks and homeowners with some experience or knowledge about the financial markets know that the markets will trade in anything as long as supply and demand exist. It doesn’t matter if the subject matter (i.e., the traded “asset”) resulted from fraud, mistake, or plain incompetence. If there is a security or quasi-security (i.e., certificates falsely labeled as “mortgage-backed Bonds”), a market maker, brokers, buyers, and sellers will emerge.
There is a reason to at least have some familiarity with this for those who defend against false claims to administer (“Service”), collect or enforce claims for payment.
Buried in all securitization scheme documents is a provision that basically says this:
“We (the originating investment bank that issues and sells the certificates on their own behalf under the name of a REMIC Trust) will report to you (the investor) what money we have advanced if we choose to advance it, when our independent contractor financial technology company does not receive a homeowner’s scheduled payment.
You may not question or audit the report or the status of the transaction with the homeowner, and neither can the trustee of what we have called a “REMIC Trust.”
You hereby agree that these advances are in our sole discretion and that they will be treated as an advance by the servicer even if the shortfall is covered by “over-collateralization” or a reserve fund consisting entirely of money invested by investors like yourself. You also agree that these claims are property of the underwriter that may be sold and//or subject to securitization in a new round of issued certificates.
Upon foreclosure, after the liquidation of the property, the advances that we announce as advances shall be a first-priority claim on the foreclosure sale proceeds. The right to claim these proceeds shall be the property of the Master Servicer whom you agree can be the underwriter of these certificates acting as a Master Servicer or such other company as might be appointed or designated by the underwriter of these certificates.”
So that is what is now called MSRs. It is the right to receive the process of a foreclosure sale by a party who has nothing to do with the original transaction at the expense of the original investors who funded the transaction in which a loan from an off-shore company was paid. No loan account is satisfied or even reduced. The people who participate in foreclosure schemes have only one goal: to get their hands on the money that can only appear if the property is forced into a foreclosure sale, even if the claim is completely false.
In a recent report, this was described as follows:
“there’s this whole other market that’s going to continue in the $250 million to as much as $20 billion range, and there’s different buyers that operate within that category.”
see https://www.housingwire.com/articles/rumors-of-mega-msr-offerings-from-wells-fargo-stir-market/
This is one of the reasons that the entire securitization infrastructure for most consumer transactions that are labeled as loans are not loans. This is also one of the reasons s that. as you can see, any report from a company that claims to be a servicer is a document prepared ONLY for making false claims.
And it is the reason why reports that the “Servicer” sought approval from the “investor” are completely false and, therefore, violate Federal and state laws concerning loss mitigation and modifications. No investor has even been contacted because they are not allowed to know anything. The trustee is not allowed to know anything, either.
No report from the company that has been designated as a “servicer” is anything other than a self-serving compilation of reports from other companies. The goal is to foreclose — not to collect on a debt.
When you do the investigation, you will see that there is a creditor that (a) affirmed and warranted it is the owner of an obligation due from the homeowner and (b) that it appoints a company to act as a “servicer” to collect, process and distribute payments from homeowners.
These companies do not receive such payments, and they distribute nothing.
Their report is inadmissible hearsay, even if it is correct. It is not the best evidence (trial objection or objection to affidavit). The best evidence is the ledger of the creditor, who must come to court and affirm that it is the owner of the obligation due from the homeowner and who can produce the ledger to show the entries creating the unpaid loan account.
The report from the self-proclaimed “servicer” is not admissible as best evidence and is hearsay as to the balance due — which is the key fact that must be tested as the central “truth of the matter asserted.”
Practice note: Homeowners need not prove what I have said above. They need only ask where the money typically goes in the case of foreclosure in the name of, for example, US Bank “as trustee.”
- If it does not ordinarily go to the “trustee,” then where does it go and why?
- If it does not go to the “trustee,” then why should the trustee collect it?
- If it does not go to the “trustee.” is that because the trustee has no entitlement to receive it?
- If the trustee has no right to receive it, why is the foreclosure brought with the the “trustee” named as the claimant, beneficiary, or plaintiff?
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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 14 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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Filed under: foreclosure | Tagged: best evidence rule, business records exception to hearsay rule, hearsay rule |
Servicer Advances (SA) are NOT just for missed payments. They are for ANY fee (even one dollar) assessed that, ultimately, permanently misapplies your payments. You are correct – SAs have priority of payment first. Unfortunately, the government does not recognize that MSR accounted for “assets” – which included ownership of servicer advances – are invalid. Money trail. Or, more precisely, lack of a lender, and only a debt collector from day one.