Don’t call the forensic auditor as an “expert”

The start of every “loan” transaction with the homeowner (except in rare occurrences) is a lie. The enemy of success for the homeowner is himself. If he believes that the statements he receives and the nonpayment claims, together with the imposition of fees, are true, the homeowner will fail to employ defense strategies and tactics that any normal civil or criminal defendant would use. Such a homeowner will admit and even emphasize the existence of a nonexistent default.

Despite various presentations of irregularities in the paper documents presented in support of the illegal, false claim, the homeowner will lose nearly every time if they assume that the claim against them is true. And presenting an “expert” will never help that gullible homeowner.

Lawyers who subscribe to that lazy and unresearched view will agree and seek a settlement in exchange for earning a few dollars in legal fees.

Together they will often present an “expert report.” And that report is nearly always either thrown out completely or ignored.


There is a technical definition and a pragmatic one. The technical definition is that an expert is someone who can demonstrate superior knowledge that nobody other than those possessing his credentials would know or understand.

In foreclosure litigation, there is no such person. And the reason is that the issue is not what most homeowners think is the relevant and controlling issue in the litigation. It doesn’t matter that the scheme for the issuance and sales of unregulated securities is illegal or even fraudulent. All of that is a truthful allegation, but it has no relevance to foreclosure.

The only issue in foreclosure cases is whether the claimant has suffered a default. Contrary to popular belief, the issue is not whether the claimant has issued a declaration of default or whether anyone has issued such a declaration on behalf of the claimant.

Since the issue is whether there has been a default suffered by the name of the claimant, the appropriate response is to demand corroboration of the default. But since nearly all homeowners and nearly all lawyers, know that the homeowner stopped making payments voluntarily or involuntarily, they stipulate to the prayer that a default has occurred.

If I stop making payments to you, it may be because I suddenly realized you were not entitled to any payments. The fact that I stopped making payments is not a default unless I owed money to you. Part of the proof of that would be showing that the named creditor is, in fact, receiving the proceeds of payments tendered by the homeowner until the payments stop.

But it is true that by making voluntary payments on a nonexistent debt, you create an inference and even a presumption that the debt exists for legal enforcement and the payments were due to the named creditor or claimant. But a claimant is not a creditor if it does not possess ownership of an unpaid account receivable due from the homeowner.


If you call a witness as an expert, you immediately trigger various legal challenges and tests to determine whether or not the witness is in fact, an expert as I have generally described the attributes above. This leads to generally unsuccessful litigation.

Homeowners like to call forensic auditors, as “experts” because it sounds better to them. They think it will make the Judge pay closer attention. Nothing could be further from the truth. Even if the judge allows the testimony of the witness as an expert, he, or she may be doing so in an abundance of caution to avoid reversal on appeal. That does not mean that the judge is giving the slightest weight to anything that they have heard. The opinions of the expert generally equate to a conclusion of law, which is the sole province of the court to determine. There is no legal support for accepting the conclusions of law announced by an expert witness.

But there are plenty of people that you can call as fact witnesses, who have adequate credentials, experience, and track records in courts of law, who can get the attention of the judge. Bill Paatalo has been highly effective in this capacity as a licensed private investigator. Such witnesses will often be able to testify that the reference to a trust is not corroborated by any evidence available in the public domain or otherwise.

Hence the reference to a trustee for the trust would be irrelevant as a legal conclusion. But you don’t need the forensic auditor to say that, because most judges would understand that with very little prompting.


I won by showing that there was no foundation at all in the proof offered at trial for the proposition that the trustee on the trust had ever received, purchased, or possessed ownership of the underlying obligation, note or mortgage. The best the opposition has ever been able to do is to argue constructive possession by parties. And those parties fail to corroborate their relationship with the trustee, which is an essential ingredient in establishing the relevance of the trust.

So the moral of the story is, is there anyone who tries to go into court with guns blazing, alleging fraud and other illegal activities generally fails in their attempt. That’s because the evidence to support those allegations live strictly within the records and ledgers of parties, who will never let you see them. But the real reason is that such a fraud and illegal activity is irrelevant to the issue: does the homeowner owe money to the named claimant, a legal creditor?

Homeowners and their lawyers fear asking that question because they think they know the answer. But they don’t know the answer and should not be concerned with it. A criminal defense lawyer does not care whether his client might be technically guilty or innocent. The defense lawyer looks for ways to defeat the claim. That’s the way our system works.

PRACTICE HINT: most people get tripped up by the possession of the note. First of all, you should remember that the original note as almost certainly been destroyed, and whatever has been presented is a copy of a re-creation of the promissory note and very possibly a fabrication because nobody can find an original image.

Second, there is an enormous difference between saying, you possess something and corroborating delivery from someone who had a right to possession. Saying it doesn’t make it so. But if you admit that the statement is true, you have just created the law of the case.

Third, the fact that you possess a promissory note, even if it was properly delivered, does not mean that it was delivered to you with the intention of doing anything other than delivering it to someone else. Article 3 of the uniform commercial code makes that exact point, which is congruent with the national code that preceded it.

In other words, for hundreds of years, the lawyer has been that possession of the note does not allow for enforcement unless the note was delivered along with the authority to enforce it. And that authority to enforce. It must come from somebody who either owned the underlying obligation or who was otherwise authorized to enforce the promissory note.

Upon any legal or logical analysis, ultimately the authority to enforce the note can only be derived from authority issued by the owner of the underlying death. Contrary to the belief held by lawyers and judges who slept through UCC transactions in law school, the promissory note has never legally been considered the debt, just as the mortgage has never been considered the debt. And the transfer of the mortgage lien, which is the subject of every foreclosure, action, is only effective if there has been an effective legal transfer of the underlying debt.


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