Due Process, Discovery and Burden of Proof

       Non-judicial process was never intended and could never be constitutionally applied as a mere trick to avoid due process. If these parties wish to initiate foreclosure they must, whether it is a judicial process or a judicial process, possess the attributes of the basic jurisdictional elements of standing and they must possess the attributes of being authorized to proceed by the true parties in interest i.e., the necessary and indispensable parties. The fact that a state allows non-judicial process does not grant carte blanche to any wily person or entity to try its hand at foreclosure and see if they get away with it.

If they are allowed to continue to raise defenses and make allegations without establishing the basic jurisdictional elements of legal standing and without establishing and disclosing the real parties in interest, then the entire case and all foreclosures are a mere charade, inviting any unscrupulous character to attempt to create color of title over the loan and the  foreclose on it.

“How do I prove that?” There are several answers. You know your loan has been securitized but the Judge doesn’t. And even if it has been securitized, how do you show that defeats the foreclosure? In this post I will answer these questions, which appear to be the most asked.

First, do NOT fall through the trap door of taking on the burden of proof. This is trickier in non-judicial states than judicial states but it is still possible to shift the burden of proof onto the pretender lenders if you do the right things and of course, if the Judge agrees with you. Remember these strategies presented here are valid in my judgment — but tactical, strategic and legal considerations by local licensed counsel trump anything I say here.  And for those of you considering class actions, which appear to be popping up all over the country, leave the door open to “fraud on the market.” By its very nature it is ipso facto a class action and eliminates many hurdles.

In all cases, I strongly recommend a forensic review with all four legs of the stool, lest you tip over and fall on your ass. The TILA audit is not only not enough, it is incomplete without considering inflated appraisals, UCC, SEC and chain of title. Without ALL elements present you can’t allege the right things that will enable you to argue that the right to rescind never started running because they withheld the identity of the real lender. Without the securitization information, you can’t allege that the opposing party is a pretender lender. Without the chain of title information you can’t allege that your rescission is effective and that off-record unreported fees and profits were earned. Without the inflated appraisal, you can’t allege that the APR on the good faith estimate is not only wrong, it is fraudulent diverting the borrower’s attention from what is clearly a usurious loan.

And the forensic review process should INCLUDE the debt validation letter (DVL), the  Qualified Written Request (QWR) and probably a notice of rescission under the three-day rule even if the closing was years ago. The good news is that with the QWR there is no restriction on the number of questions you can ask, there is a statutory duty to answer it and you can get a TRO just based upon the fact that RESPA has been invoked.

I strongly advise that you retain a firm with a subscription to ABSnet that renders a separate and independent report on the loans of the specific class representatives so that you can produce, in court, copies of public records documents in the public domain that are subject to judicial notice to create the presumption that these defendants can’t possibly own the note. By doing this, when asked about these specific loans rather than the way things work generally, you can say that these loans definitely did operate in the usual way, that you have copies of the public records to show, and that if the facts are any different it is only because the defendants did not properly report their activities to the SEC or have otherwise failed to answer basic questions of the borrowers like “who is my lender?”

Don’t leave an issue floating which is central to the entire securitization defense and offense: that it isn’t so much whether they will suffer a loss for each foreclosure, but rather that they stand to lose nothing and gain everything. One of the following is true:

1. They don’t own the note and they have no authority to enforce the note or mortgage because they are not named on it and they have not been given express authority by the holders of the the note and mortgage along with indemnification for all costs, expenses, and claims.
2. They don’t own the note and they have authority to enforce the note or mortgage because they have been given express authority by the holders of the the note and mortgage along with indemnification for all costs, expenses, and claims.

Either way they don’t own the note. By definition that is what securitization means. The reason for the procedure invoking limited discovery is to force these parties to either put up or shut up. Non-judicial process was never intended and could never be constitutionally applied as a mere trick to avoid due process. If these parties wish to initiate foreclosure they must, whether it is a judicial process or a judicial process, possess the attributes of the basic jurisdictional elements of standing and they must possess the attributes of being authorized to proceed by the true parties in interest i.e., the necessary and indispensable parties. The fact that a state allows non-judicial process does not grant carte blanche to any wily person or entity to try its hand at foreclosure and see if they get away with it.

Whether you started in non-judicial or judicial forum, you are in court now. The pretender lenders wish to defend the against the borrowers’ claims. They have no standing to defend except as nominal parties unless they can show they have legal standing and that the necessary and indispensable parties are present, disclosed and accounted for in this action. Defendants seek to divert the court’s attention from the most basic elements of due process and fairness when they allege the “loss” they will suffer as “lenders.” They are not lenders. That is the point of the lawsuit. If they are allowed to continue to raise defenses and make allegations without establishing the basic jurisdictional elements of legal standing and without establishing and disclosing the real parties in interest, then the entire case and all foreclosures are a mere charade, inviting any unscrupulous character to attempt to create color of title over the loan and the  foreclose on it.

Each day these defendants (pretender lenders) are allowed to proceed under cover of plausible deniability is another day in which the title of Plaintiffs/Borrowers will be further clouded by further off-record activity that will become on-record when they choose to do so, all in transactions conducted under cloak of secrecy and deception. The situation is bad enough without allowing these defendants (pretender lenders) to make this court complicit in their fraudulent claims, resulting in clouded and unmarketable title.