Mark Stopa: Preparing for Trial In a Foreclosure Case

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EDITOR’S NOTE: Stopa makes some very good points for lawyers to consider, the main one being that you should make it as hard as possible for the would-be forecloser to prove their case. If they really have the goods, they will prove it; but as we have seen time after time, the documents are fabricated, even forged and they have no witnesses to authenticate the documents. The mistake made by lawyers and pro se litigants alike is that they know they signed a note and they assume the note was valid. So they shy away from denying the authenticity of the documents or the validity of the documents. That is a mistake.

Start at the beginning. Look carefully at the documents and see if they actually describe the transaction as you NOW understand it given the claims of securitization and transfers. Look even more carefully — the so-called original note might be mechanically fabricated indicating that they did not proffer the original note into evidence — which means that the original note is still out there, somewhere, in the hands of someone else. Of course it also means that the attorney and his/her client are attempting to perpetrate a fraud upon the court, especially if the attorney’s office had anything to do with fabricating or signing the documents offered at a hearing or at trial.

If you start from the premise that the documents are invalid, not the originals, and do not describe the transaction that actually occurred — as to parties or terms — then you are on the right track. To assume otherwise, is to give up most of your ground before you even begin. And of course that means a gift to the pretender lender who is now attempting to foreclose on a home using a loan that it did not fund or purchase.

Preparing for Trial In a Foreclosure Case by Mark Stopa

Posted on May 11, 2011 by Mark Stopa http://www.stayinmyhome.com
I have a trial tomorrow in a foreclosure case. It’s in Lee County, of course – the county where the judges prosecute cases by setting trials sua sponte. Right now, I’m earnestly preparing for trial, but I thought I’d take a break to discuss the two issues are paramount in virtually every foreclosure case/trial. Depending on the facts of a particular case, there may be other issues, of course, but these two issues are critical to a Plaintiff’s ability to win at trial and should, in my view, be vigorously defended in virtually every case:

1. Introducing the Note into evidence.

2. Proving the homeowner’s default in payments and the amount owed.

Re. the former, we all know the Plaintiff must introduce the original Note into evidence, failing which a foreclosure judgment cannot lawfully be entered. The fact that a Note is “self-authenticating” makes this seem like a low hurdle – the Plaintiff’s attorney simply needs to hand the original Note to the judge and it will be admitted into evidence. Fortunately for homeowners, it’s not that simple.

Under Fla. Stat. 673.3081, if a homeowner denies the authenticity of a Note or the signatures thereon in the pleadings, the Plaintiff must authenticate the Note, and its signatures, at trial. There is still a presumption the Note and all signatures are authentic, but by contesting authentication, a homeowner can force the bank to authenticate the Note at trial. This may be harder than you think. For instance, if I challenge the authenticity of a blank indorsement, the Plaintiff must put on testimony from someone who can swear, under oath, that he/she saw the indorsement executed or that he/she recognizes the signature and it is authentic. Similarly, if I challenge the authenticity of the Note, the Plaintiff must present a witness who can testify he/she saw the homeowner sign the Note or who recognizes the homeowner’s signature based on other documents. The way that Notes change hands between banks, neither of these things would be very easy, and I doubt the Plaintiffs’ lawyers will be prepared to deal with these evidentiary issues. In other words, it’s quite possible that if the homeowner preserves these evidentiary objections at trial, the Plaintiff’s lawyers won’t be prepared for them and won’t even have the requisite witness(es) at trial to testify.

Re. the second issue, testimony at trial must generally be based on personal knowledge. That means the Plaintiff must testify to events he/she has seen with his/her eyes or heard with his/her ears. This is virtually impossible to do with regard to proving a homeowner did not pay a mortgage payment or proving the amount owed, so the Plaintiff invariably must rely on documents to prove these facts. This is permissible, but only if the Plaintiff can introduce these documents under the business records exception to the hearsay rule.

Again, this is harder than you think. The Plaintiff must show: (1) the documents are a memorandum, report, record, or data compilation; (2) made at or near the time of the event; (3) by or from information transmitted by a person with knowledge; (4) kept in the course of regularly conducted business activity; and (5) that it was the regular practice of that business to make such a record. All five elements must be satisfied or the documents cannot be used as evidence at trial.

I’m not trying to teach anyone how to practice law. Rather, my point is that there are virtually always things that can be done to make it difficult for a bank to prevail in a foreclosure case; these are just two examples. So don’t give up – keep fighting foreclosure!

Mark Stopa

Foreclosure Defense: Impact of Bank Failures

I have been thinking about this as the questions pile in. Here are my thoughts so far —

1. Be careful with the Lehman bankruptcy and any other bankruptcy filing by one of the financial services companies that was even tangentially related to the process of the securitization of mortgages. Bankruptcy law has some features that are not apparent or even comprehensible to layman and even many lawyers who do not regularly practice in bankruptcy court. If you even hear that a company went bankrupt, you should consult with a competent bankruptcy practitioner in your area and ask him whether you need to file a proof of claim or some other paper that tells the Federal Court where the bankruptcy was filed that you have claims and defense regarding your mortgage and note, that you do not intend to waive them, and that if anyone buys our note or mortgage they take it subject to your claims and defenses.

2. How this might affect your claims and defenses. The burden is still on the party seeking to foreclose on your mortgage. They must allege that they are the lender, the holder of the note and that the note is in default, subject to acceleration pursuant to the terms of the mortgage indentures and the terms of the note. As with any other situation involving foreclosure if you snooze you lose. Do nothing and the Court is allowed to and required to assume and proceed as though you have no claims or defenses. Do nothing and your house will be sold at auction and then you will be scrambling to set the sale aside, which has been done, as we have reported here, but it sure makes your position more precarious than if you act proactively before anything happens.

  • ASSUME NOTHING AND CHALLENGE EVERYTHING: Just because a letter was sent out declaring a default doesn’t mean that the person who signed it knew anything about the account or that they were properly authorized to send it, or even that their company was the proper party to declare the default, or, even that their company knew or had performed any due diligence to determine if payments to teh true holder in due course )holders of mortgage backed securities) had been paid by co-obligors acquired as the loan went up through teh chain of securitizarion.

3. Proof and evidence: The failure of a bank and the takeover by another bank creates several opportunities for borrowers that did not exist before, if you know how to navigate the system. The time is NOW to act proactively, get your audit done, announce rescission, demand satisfaction of your mortgage and note, and to file for quiet title.

4. You ALWAYS want to keep the burden on the “lender” or those claiming through the “lender.” Do everything you can to keep the burden on THEM to produce the note, produce ALL the assignments that show proper chain of title on the note and mortgage, and produce the Assignment and Assumption of Mortgage Agreement(S), and the Pooling and Service Agreement(s).

5. Thus far it appears as though there in only ONE set of master agreements executed by the lender, the mortgage aggregation and the trustee of the pool of assets. The date of these agreements will almost always precede the date the date the mortgage and note came into existence and will without exception predate the date of default. For lawyers, this presents a number of arguments that can be used to throw the other side into disarray as to what assignment, if any, was valid, and whether they were hiding third parties at the loan closing (violation of TILA) and whether they were hiding third party payments at closing (TILA violation).

6. It also gives you grounds for saying that since the REAL lender was not disclosed, the three day rescission right continued up to and including the date when the REAL lender was disclosed. Either they disclose the REAL lender and then you have all your remedies against both the pretender lender and the real lender (probably unchartered as bank or lender and even unregistered as business to do business in the state) or they don’t disclose it and you push the issue of non -disclosure by demanding the records of the mortgage servicer and the mortgage originator and the title/escrow agent to track where the money came from and where it went after closing.

7. LAWYERS TAKE WARNING: First of all remember that the competency of a witness contains four elements (oath, perception, memory and communication) and that proof can only be offered upon a proper foundation. It is here where these overnight mergers, the firings of thousands of people, and the locations of records is going to be a real challenge to the lenders.

8. DO NOT TAKE LENDER AFFIDAVITS FOR GRANTED. THEY ARE MOST LIKELY OUTRIGHT FRAUD, FORGED, OR SIGNED BY SOMEONE WITH DUBIOUS AUTHORITY. IN ALMOST ALL CASES EVEN IF THE AUTHORITY is established by a competent witness though the presentation of a proper foundation, IT IS SIGNED WITHOUT ANY PERSONAL KNOWLEDGE — WHICH IS WHY I MENTION THE ELEMETNS OF COMPETENCY OF A WITNESS AND PROPER FOUNDATION. THIS IS BASIC BLACK LETTER LAW. YOU CAN WIN, NOT MERELY DELAY CASES. AND YOU CAN DO THEM ON CONTINGENCY FEES THAT WILL ENABLE YOU TO EARN SUBSTANTIAL FEES THAT YOUR CLIENTS WILL HAPPILY PAY.

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