What good are the reports and analyses?

If you have a medical problem do you want just one doctor to look at your lab results or a team of doctors each doing their own analysis? The same question applies if you are heading into litigation. The problem for homeowners is that having a deep bench of professionals costs money. That is the way our system works, for better or worse.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consent to many people and lawyers so they can create a compelling defense narrative to foreclosures. If you have a foreclosure or a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.


Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).



Today I was copied on an email sent by a client who was frustrated by having to pay his attorney to do his own analysis of the status of the loan and litigation in addition to reports of Bill Paatalo and myself. The client regarded the work done by the lawyer as the same as reports done by forensic analysts, and the same as the work that I do at www.lendinglies.com. Here is my answer:

Although it may seem the same, it isn’t. Bill and I are even different. He does a factual report produced by research and investigation. As a lawyer and expert witness on the securitization of debt, etc, my reports are different from Bill’s.

The lawyer is doing something else entirely — making strategic and tactical decisions that will result in a homeowner winning the case — not just being “right.” The lawyer not only uses his unique knowledge of local laws, rules and procedures, he/she will only pursue those issues, claims and defenses that have the highest likelihood for traction and the lawyer makes the difficult decision of selecting 2-3 issues out of dozens because he knows the local bar and can make the best judgment on which tip to put at the end of the spear.

The “bench” for the financial industry is very deep involving as many as 20 people, most of whom are not seen by you because they want it to appear as a “standard foreclosure.” You need to understand that because of finances you are limiting your bench to one person (a lawyer or consultant) when what you need is a full bench.
For your lawyer to use any specific strategy or tactic he/she needs to believe in it. If not, it will not play well in the courtroom even on motions. If the lawyer wants to do further analysis to bring himself/herself up to that level of confidence then that is what it costs. If the lawyer is satisfied to direct the work of Bill Paatalo or myself to provide “second sight”, then that is what should happen.
The Justice system is based upon rationing out decision making where there is a dispute. It boils down to a vetting process based upon available resources. In other words it is about money. Lawyers, forensic analysts, and consultants, have spent years, even decades accumulating knowledge, skill and intuition. They have a right to get paid for that when it is applied to your benefit.
In an event like the past and current tidal wave of foreclosures based upon questionable and fraudulent business practices sometimes law enforcement gets involved; but the real benefit of winning and stopping the foreclosure can only be achieved through direct action by the homeowner and not some agency. That takes money from people who were wiped out by Wall Street banks who are propped up by an executive branch and legislative branch that not only doesn’t help homeowners but actually pass and enforce laws directly opposite to the legitimate interests of homeowners.
The system, particularly nonjudicial foreclosure, is rigged to favor devious parties who use fraud as their business plan. They have very deep pockets. For a homeowner who wants to win a case, the homeowner must be willing to commit resources required by the effort. Each professional has their own contribution to make, if you let them. Even if they are performing what appears to be identical work you will get a better decision based upon better interpretation.


the basic thrust of the defense is to point out what is absent rather than attack what is not absent.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
As predicted on my blog back in 2008, we are seeing new names of Trusts emerge in foreclosure cases — involving old loans that were declared in default years ago by parties asserting they represent the alleged servicer of either a named bank or servicer or an old trust. What happened? As our sources had revealed, the alleged trusts had nothing in them and were the source of extreme liability of the Master Servicer acting as underwriter to the investors and third parties who traded in securities based upon the representation that the Trust actually owned the debts of millions of homeowners.
We have not seen the agreements, but we are told, and our analysis confirms, that the old trusts were “retired” and that new trusts, also empty, are now being used wherein the paperwork for the new “Trusts” is far more complete than what we have previously seen.
As far as we have determined thus far the mechanics of the change of trust name are along the following lines:
  1. There is probably a purchase and sale agreement between the old trust and the new trust. Like previous documentation there are no warranties of ownership but ownership of the debts is implied.
  2. Like the old Trusts, foreclosures are brought in the name of the new trusts, using US Bank or other major institution as the “Trustee.”
  3. Investors in the old trusts are given certificates in the new trust as settlement of claims brought by investors for malfeasance in the handling of their money — namely the origination of loans instead of the acquisition of loans and the granting of loans that were far lower in quality than agreed and far higher risks than allowed for stable managed funds.
  4. This “resecuritization” process is a sham just like the original old trust. But it follows the playbook the banks have been using for over a decade. By adding another level of paper to fabricated documents based upon nonexistent transactions, it promotes the illusion of valid transactions and valid documents.
  5. Like all other trusts and hybrid situations in which trusts were involved but not named, the entire scheme is based upon a simple premise. The banks have managed information and data such that there remains a false sense of security that they are still credible sources of information — despite all evidence to the contrary. The additional layer of documents then adds to the illusion because it is counterintuitive to believe that these high level complex documents represent transactions in the real world that don’t exist.
Defense strategies remain the same, however. The issues in evidence laws and rules are foundation, and hearsay.The basic defects in the bank’s credibility must be revealed even if it does not get to the point where everything is revealed. The rent-a-name practice for appointment of trustees that have no obligations or duties continues. The “apparent authority” of the servicers is based upon a trust document of an entity in which there is no asset. But the website of US Bank and others suggest that they have business records — which in actuality do not exist. Hence, the basic thrust of the defense is to point out what is absent rather than attack what is not absent.
This takes strict logical analysis by the attorney representing the homeowner — an exercise that in most cases cannot be accomplished by a pro se litigant. It may be beyond the confidence of the lawyer too, but there are many people in the country who provide services that assist with the logical analysis and factual analysis — including but not limited to the team at LivingLies and LendingLies. The analyst should be well-steeped in the three classes of securitization — concept, written documents and actual practice in order to come to conclusions that are not only correct but are likely to give traction in court.
While tempting, attacking the existing documentation on the basis of authenticity or validity is a rabbit hole. The only parties that actually have the proof as to the fabrication of any one particular transaction are the parties with whom you are in litigation and the parties who created them and use them as sham conduits. They resist by all means available any attempt to provide access tot he real information and the real monetary transactions which look very different from the ones portrayed in court.
By making an allegation you are now required to prove what you have said by evidence that the other side simply will not give up. This is not to say that there is no value in sending a QWR (Qualified Written Request), (DVL) Debt Validation Letter, or a complaint to the state AG or the CFPB. Much of the inconsistent statements come from those responses and can be used in court. And there is also considerable value in seeking discovery even if we know that in most cases, while it should be allowed, the judge will issue protective orders or sustain objections to requests seeking the identity of the owner of the debt.
The value of those apparently futile endeavors can be that at trial the foreclosing party will almost certainly rely on legal presumptions that depend upon information contained in your discovery request.
OBJECTIONS AT TRIAL: This requires research and analysis of potential objections and how they should be used. While a motion in limine before trial would seem to be the better practice, the real traction seems to come at trial when the homeowner raises objections and moves to exclude evidence that relies upon data contained in discovery they refused to answer and which the court ruled was irrelevant. It is of utmost importance, however, that in order to use the discovery exchanges, you must file a motion to compel and set it for hearing and get it heard. The risk of a motion in limine is that the court is more likely to deny it and then when raised at trial in an objection will regard your objection as a second bite an apple that has already been the subject of a dispositive ruling.
Cross examination of the robo-witness should be aggressive and relentless pointing to the actual lack of knowledge of the witness about anything other than the script from which he was trained to testify.

The Games Are on At the Auction: Home Advantage?

Editor’s Note: While the banking industry have made it “illegal” for a homeowner to have a relative buy the home at foreclosure auction and then give it back to their son or daughter, there are many games at play in the auction. And don’t forget there are no auction police around. They have to figure it out in order to do something about it. And if your claim is fraud, which it probably ought to be, it becomes a he-said, she-said sort of thing that they don’t want to get into because that could mean you might have the right to legal discovery which would blow open the whole can of worms. It is obvious that the credit bid submitted to buy the property by the pretender lender is not a credit bid. A credit bid could only come from the creditor and the party submitting the “credit bid” is not the creditor.

So one thing emerging is that if you submit a bid  of SOME amount, even $100, and then invalidate the credit bid, you might end up with the house. Not so fast — it won’t be that easy most of the time but several reports received by this author indicate it has gone just that way. The higher the bid from you the more likely a court will confirm it, although there are some states that do not require confirmation of the bid, which is like non-judicial foreclosure in favor of the borrower. The key is to invalidate the credit bid. The next thing is to assert that your bid had to be accepted because it was the next highest bid and the only valid one. Obviously you need an attorney with guts and brains to do this.

Another interesting practice that has been in motion for for the past 2 years is peer-to-peer auction buying. The buyers know each other and have made a deal before the auctions on BOTH their homes. Each buys the home of the other. Usually they have the money to do it from relatives or some source. But the invalidation of the credit bid could be used in this scenario. After the auction is complete on both homes and the title is issued the two buyers either rent or swap titles. Now both are back in position where they can get a mortgage or loan from somebody that reflects the actual value of the home. In those states where the non-judicial sale or judicial sale prohibits the “lender” from pursuing a deficiency, the game is over. In other states I wouldn’t worry too much about it, because it is a regular law suit and they would have to prove how much they lost. If the pretender lender brings the suit, they didn’t have a dime in the deal and it is an admission that the credit bid was bogus. If anyone else files the suit they are alleging that the credit bid was submitted by someone other than the lender. Either way you win.

Then you have the games required to just do it using conventional means which are described in the article below.

The main point that I want to make here is that regardless which strategy you pick, including just walking away from the house, there is very good legal support for the proposition that a foreclosed house has neither been foreclosed nor sold and that the “former” homeowner is still in fact the legal owner of the house. This leads to all sorts of lawsuits and actions for damages. So whatever you do, you are probably missing an opportunity to get some money or the house back if you don’t file suit for quiet title and damages. Naturally this blog is no substitute for legal advice, so you should secure the advice and services of a licensed attorney before you make any decisions.

But here is a little word of caution to LAWYERS about MALPRACTICE. Don’t let your laziness or your failure to bring yourself up to speed on securitization get you into trouble with the bar or in a lawsuit later for attorney malpractice. And start re-tracing your steps for clients you have seen over the last 3 years.

  • Whether you practice in property law, civil litigation or bankruptcy, if you don’t know the basics of securitization and if you don’t advise your client to get the information pertaining to their transaction and determine the identity of the creditor and the net amount of the obligation and whether there really is a default after loss mitigation payments, then you have failed to give advice to a client who needs it.

  • Later, just as the last few weeks have revealed, you may end up with egg on your face. I wouldn’t be too surprised to see some legal malpractice cases started by people who went to lawyers who didn’t notice that the notarization was invalid, that the document was fabricated and that the signatures were unauthorized and forged.

October 29, 2010

What It Takes to Buy a House in Foreclosure


ATLANTA — As in any economic downturn, the wave of home foreclosures has attracted voracious opportunists — investors among them who are buying, fixing and then renting the places out.

In their wake are aspiring owner-occupants. How hard could it be, they ask, to pick up one of these houses on the cheap and make it livable?

For an answer, consider Jennifer Kuzara, 32, a grants manager for a nonprofit organization here. From early 2009 to early this year, she spent about 1,000 hours on her foreclosure project. The gang of helpers she assembled included two real estate agents, a banker, an architect, a contractor and her parents.

To stand a chance of making the project work in the neighborhoods where she was willing to live, she needed $100,000 in cash. Ultimately, Ms. Kuzara and her parents were exposed to a fair bit of risk, all in the name of a bungalow in a middle-class neighborhood.

And while the specifics are particular to Ms. Kuzara, plenty of people in foreclosure-ridden markets in Florida, Arizona, Nevada and elsewhere are in for a house hunt that is going to look a lot like hers. The headlines may be raising all sorts of questions about whether the foreclosures were legitimate. But there will always be people who want to buy when things are really cheap and are willing to press ahead when the quest seems most challenging.

So this is the story of what it will take for their search to have a happy ending.

It began in 2006, when Ms. Kuzara had nearly six figures in student loan debt and the housing market was at its most heated. She was virtually certain that she would never be able to afford a home. “I remember thinking that it might have been the end of my American dream,” Ms. Kuzara said.

Two years later, after she had finished her Ph.D. course work in anthropology at Emory University, and begun full-time work in the nonprofit field, the housing market began to turn. Not long after, a friend was considering buying a foreclosed home as an investment property and encouraged Ms. Kuzara to look at the listings.

Through another friend, Ms. Kuzara found Lisa Iakovides and her business partner, Michael Redwine, real estate agents at a company called Atlanta Intown. They established some price parameters and some items that would be deal breakers, like mold and crooked rooflines.

Then they shopped for neighborhoods. One, East Atlanta, made the short list, even though Ms. Kuzara hit the floor of Mr. Redwine’s car one day when she heard gunshots on the way back from visiting a home there. She and Ms. Iakovides hadn’t even started up the walkway of a house in another neighborhood, Peoplestown, when a neighbor loudly made her feelings known about white people moving in.

Other homes told stories in subtler ways. “Squatters had taken them all over,” Ms. Kuzara said. “Some moved in furniture and their families. But there was one where I never would have known until I opened up a closet and saw a little stack of sleeping bags and blankets. And on the top ledge there was a knife, a fork and a spoon.”

Ms. Kuzara vowed to leave cookies and a nice note for whomever was living there if she bought that home, but she didn’t get it or many others. By the time she entered the fray, investors were already swarming. She bid on at least 10 homes over six months and lost them all.

The house she finally bought had been divided in half and turned into apartments, which might have been why she did not have to fight so hard for it.

The 1,100-square-foot bungalow sits high on a small piece of property in the Edgewood neighborhood. It is one of those places where you can walk a few blocks to the left and find two stores with a fine malt liquor selection, then stroll 10 minutes to the right to Bed Bath & Beyond for high thread-count sheets to sleep off the hangover. Ms. Kuzara’s block has a halfway house for former substance abusers next door and a beautifully renovated home across the street with an alarm service sign planted prominently out front.

Ms. Iakovides managed to get a preliminary $39,000 offer accepted by the bank on the home in early August 2009, and she began trying to set a closing date. Ms. Kuzara drove by the home each day, planning the renovation.

But one day she found the front door wide open and called her real estate agents in a panic, worried that vandals were casing the place or that squatters would take up residence. Without really asking the bank’s permission, the agents called a contractor to padlock the door. “Who would we have asked?” Mr. Redwine said, incredulously, as if the bank that still owned the house was actually going to return his calls.

Ms. Kuzara’s next step was to get together the money to pay for the place and the $60,000 or so in repair work. After trying early on in her hunt to cobble together various combinations of tax credits, down payment assistance programs and government loans, it became clear that most banks preferred all-cash offers for their foreclosed homes.

But Ms. Kuzara had no cash. Her parents, Mark and Jennie, had some savings but not nearly enough. So her parents borrowed $25,000 at about 8 percent interest against a life insurance policy and $50,000 more at a lower rate from his 401(k) and bought the $39,000 home themselves. They used the remaining money for the renovation, planning all along to sell it to Ms. Kuzara as soon as the repairs were done.

For that to work, however, Ms. Kuzara would need to qualify for a mortgage to buy it from her parents. She had no money for a down payment, though. To qualify for the Federal Housing Administration loan that she needed, the home, postrenovation, would have to be appraised at a high enough amount that her parents could give her some of the newly created equity for a down payment while still getting all their money back.

And therein lay the risk. Because Ms. Kuzara bought one of the worst homes on a nice block, her agents were convinced that the renovation could yield an appraisal at the value that the bank required.

It helped that they had ushered in a contractor they had worked with before, whom they could count on to stay within the strict budget. Under his supervision, the renovations were finished in less than two months.

Then came the deciding moment: the appraisals. One came in at $130,000, while the other was for $145,000. As a result, the bank allowed Ms. Kuzara to borrow $100,000 to buy the home from her parents and thus make them whole. Then she used some of the remaining, newly created equity for the required down payment.

Ms. Kuzara moved in a year ago this weekend, and today the cozy house has three bedrooms, two baths, a front porch for dinner parties and a backyard for her two dogs. She’s furnished the place with chairs from consignment stores and thrift shops and has assembled a nice collection of vintage cookware and dishes.

She pays $828 a month on her 30-year fixed-rate mortgage, including taxes and insurance, and she has a roommate who chips in $500 month.

Including the weeks when she painted every inch of the interior, Ms. Kuzara spent about 1,000 hours on her foreclosure project — poring over listings, researching every last one in county databases, visiting houses and making her eventual home habitable.

So anyone who wants to do what she did needs to be ready to put in that much time. You may need a source of funds or willing co-conspirators like Ms. Kuzara’s parents. And you will need a team of people who know the rules of the foreclosure game cold.

The odds of success are certainly long. But for those with the patience to pull it off, it sure seems a whole lot of fun to play this game and win.

“It turned out to be a sweet little house,” said Mark Kuzara, Jennifer’s father. “And I think somewhere down the road, she’ll sell that house and come out pretty nicely on it.”



I’m afraid I need to throw little water on our parade here. Yes its true that the bell has rung — but it isn’t the end of the boxing match, it’s just the end of the current round. We bloodied them up a bit but they have their own strategies and they are not as stupid as we would like — just as we are not as stupid as they would like. They are setting up a trap-door for us. BEWARE!

The current round of “we’re stopping” foreclosures is nothing more than a PR stunt much like the “stress test” that was done at the time that everyone thought the whole financial system would collapse. Then the stress test results came out and not surprisingly the results were favorable — the banks were OK and the system was not in imminent danger of collapse — or so we were led to believe. Some of us believed it some didn’t but the strategy worked.

You can expect that the banks are going to come out very soon and state that based upon their review and inspection of the documents etc. they have found that in most cases the paperwork is in order. They will apologize for using improper procedure (lying on affidavits) but the foreclosures will now go forward with the correct information on the affidavits, assignments, endorsements,, powers of attorney etc. Don’t try to make more of this than it is. They will make fools out of you if you go into court expecting the Judge to throw the book at them and declare you the winner.

Some of you might make the mistake of believing them. It’s the same lie recycled. AND you still are required to prove it. But you just made some headway in being able to prove it as Judge’s give due consideration to the fact that these foreclosure mills were manufacturing paper rather than doing the proper due diligence before initiating foreclosure. The presumptions in favor of the banks just got weaker  but they are not gone. Presumptions in your favor as homeowners and borrowers are still some distance away. There is still the nagging wrongful belief that the borrowers are immoral in defending these actions, walking away from underwater homes, and otherwise finding relief from fraudulent transactions that rarely get any front page news unless the BANKS do something. No it isn’t fair. It’s reality.

Use this event strategically to press for discovery. Don’t argue with the them about their representation that the information on the affidavit was true but that they just used the wrong procedure. Your reply should be that you understand that incorrect procedure does not change facts, but it DOES make it an issue that needs to be investigated. Their credibility is now an issue by their own admission and if the information they are presenting is all correct they should have no problem with allowing you to conduct discovery.

The essential problem for them is still the same: ANY affidavit will be wrongful and fabricated and based upon wrongful and fabricated documentation created long after you closed on the loan. The borrower never signed a note payable to any pool and the pool never received a proper assignment and didn’t want it. What they wanted was the money, not the documents. But that means they were just splitting up the receivables and not the ownership of the loan. So in each case the obligation from the borrower runs to some obligee that is neither the payee on the note nor the mortgagee or beneficiary of the security isntrument. It exists but it is unsecured and subject to set off from loss mitigation payments from third parties.

They can’t get away from the fact that the loan documents were intentionally destroyed or lost, that they never had any assignments, endorsements or powers of attorney executed, that they never sent the paperwork anywhere and that representations in SEC documents that the loans were transferred and fit the descriptions contained in those self-serving documents are just plain wrong. They are lies. Your goal should  be to get a live person swearing under oath under penalty of perjury about the facts of your loan, the status in the securitization infrastructure, and the location of the documents that prove those assertions, as well as the time that such documents were created, where, and who the people were that signed them.

As for the docket, well, if every time a lawyer does discovery he ends up proving the the case of the other side the requests for discovery will stop. Press hard and use these admissions of GMAC, BOA, Chase (and the others to come) as proof of your right and need to more information about the identity of the creditor and getting an accounting from that creditor and not just from the servicer. Do NOT think this news cycle will put you over the top  to win your case.

Also I am concerned about the whole wrongful foreclosure thing. People might get surprised if they don’t know what they are doing. I don’t think you can get damages for wrongful foreclosure just because the paperwork was wrong. I think the elements of the tort are a full breach of duty and that would mean proving that the pretender lender had no colorable right to foreclose either because the “lender” was a complete fake and/or because nobody could foreclose. This is like legal malpractice cases where there is a case within the case. You have to prove they did wrong AND that they caused you damage which means that but for them you would never have lost the house or have had a cloud on your title. In my opinion most Judges won’t agree that because they lied you are entitled to damages for wrongful foreclosure. But you might get them for frivolous pleadings under Federal Rule 11, Florida Statute 57.105 or the equivalent. As far as I know the recovery would be limited to attorney fees and costs, which isn’t a bad idea for lawyers.

%d bloggers like this: