The Motion to dismiss might be admitting your allegations and you might have missed it.

What you need to realize is that this is all about technical law. It is not an argument.

It doesn’t matter whether the act was ministerial or could be labeled as anything else. The question is simply whether they did it.

Don’t get lost in the weeds. If they did it, then the company that was designated as the “servicer” did not do it. And even if they were working for the company that was designated as the “servicer,” that “servicer” still did not do it.

Therefore any business record that is produced in response to statutory letters under the FDCPA or RESPA needs to come from the company that did it – not the company that produces the report in correspondence or in court.

This is why I keep advising you to have a trial attorney advising you on what to do next and what to do with the responses that you are receiving.

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I recently received a copy of a motion to dismiss filed in behalf of one of the 3rd party financial technology companies that was alleged to be a “servicer” in the complaint filed by the homeowner. A close look at the motion shows that somebody was not thinking when they filed it.

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The company involved was Exela, who was alleged to be receiving, processing and accounting for payments tendered by the homeowner and depositing those payments at a client’s instructions, described as an investment bank operating through intermediaries.

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This defendant has responded by filing a motion to dismiss that essentially concedes that all of those factual allegations are true, which it is required to do under the rules of pleading. *

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Usually, the motion to dismiss telegraph that if an answer is required, it will categorically reject the facts alleged in the complaint. In this case, there was no such statement.

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The motion to dismiss was solely based on the idea that even if Exela was operating as described in the complaint, it did nothing wrong and therefore, there was no legal cause of action that the homeowner could pursue against Exela.

The financial technology companies (FinTech) are still trying to pretend that the CFPB did not categorize them (May 2022) as “servicers” required to comply with agency rules governing companies that purport to be servicing unpaid receivable accounts on behalf of a creditor who owns the account. So they are rejecting the label of “servicer” even though they concede that they are performing servicing functions.

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That is somewhat like pleading “not guilty” despite video evidence showing the defendant committing the criminal act.

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Here was my response to the homeowner when she sent me the motion to dismiss:

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The first thing I want to point out is that you have accomplished something. Exela has admitted at least the possibility that they are the ones who are opening the envelopes, processing, and accounting for the receipt, and depositing checks at the instructions of “the client.”

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So it is ONLY the records of that company, Exela, that can be introduced as a business record because they are the only company that did business with the homeowner. And it is only an officer of Exela who can provide the required foundation testimony as to the report being a printout from the business records of Exela (not Ocwen for example).

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Your opposition is literally prohibited from finding or presenting such a witness, which means that they must fake the report under the name of the designated “servicer” as being the business record when the company that has a business record does not and will not appear.

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They will not produce ther records or witness from Exela because that witness will be asked a preliminary question that, if answered, would cause the house of cards to crumble. He or she would testify, if they were truthful, that Exela worked for some intermediary.

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The testimony would reject the notion that Exela worked for the servicer, making the “servicer” irrelevant and all of its records not admissible if timely and proper objections to hearsay, foundation, best evidence etc. are raised. They would lose every case, and the securitization infrastructure would be in real trouble.

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The issue in terms of this fact scenario is whether the client was an undisclosed third-party or the company that was represented to be the “servicer.” They are obviously skirting that issue in the motion to dismiss.
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If the client of Exela was the “servicer,” then there is nothing illegal about what this company has done. Outsourcing is not a crime.
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However, when the lawyer who represents the foreclosure mill goes to court, he is committing fraud upon the court if he produces a report that he says is a “payment history” that is proffered as a business record of the company that has been designated to be the “servicer.”
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That is because the company designated to be the “servicer” has not done the business represented on the report. If Exela issues that report knowing that it will be used in a false representation to the court that it is a business record of the company that was designated to be the “servicer” and not that of Exela, then your allegations are probably true that Exela was part of a civil or criminal conspiracy.
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But in addition to all of that, it is almost certainly not working for the company that was designated to be a “servicer.” Exela is almost certain competing contracts rule privity with third-party intermediaries on behalf of an investment bank, all of whom are undisclosed. What is important about this is that those are the parties that are in control of making false claims regarding the right to administer, collect and enforce.
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So this is what I have been discussing regarding the burden of proof. When the lawyer representing the foreclosure mill goes to court, he or she is coming to court with a witness from the company designated to be “servicer.”
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But the activities of that company, even if some of those activities are sufficient to fall within the definition of a “servicer” under the rules, are irrelevant. And so any documents produced by that company are also irrelevant, without foundation, and are not the best evidence to prove the truth of the matter asserted: that the disclosed or claimed “creditor” is a proper claimant, plaintiff, or beneficiary.

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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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One Response

  1. All irrelevant. Will get nowhere on this. Sorry. Won’t happen. Power.

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