How to use expert witness or subject matter expert testimony to stop foreclosure and win a quiet title lawsuit or wrongful foreclosure lawsuit
“Experts” and Fact Witnesses
A lot of people contact me asking for an expert report. Most have no education, training, knowledge, or experience in using the testimony or report of a witness claimed to be an expert.
The problem is compounded by the inability of the homeowner, or the lawyer for the homeowner, to do what every trial lawyer does with every expert witness — i.e., ask questions. Instead, they ask for an expert report as though that alone will count for something. They are right it will count for something, but not in the way they are generally thinking.
So in my most recent request for this kind of service, and asking for the contact info of the two best forensic analysts I know, I decided to give a full-throated explanation of why I was concerned that the person inquiring was probably heading down the wrong path.
This is the plan of people who invented the infrastructure of PR that is referred to as securitization of debt even though there has never been and never will be a sale of any unpaid loan account to anyone.
And homeowners and their lawyers would end up in one of the many rabbit holes (traps) that lawyers set when they initiate and prosecute false claims based upon the false implication that a loan exists and that the actor named as the claimant owns such an account.
I think I have a problem with your request. People tend to request an expert report for use at trial. While such reports can be extremely useful during litigation, they have dubious value at trial. The report itself is not evidence and requires the testimony of its author to establish its authenticity. And the author is not likely to be allowed to testify about opinions of fact or opinions of law unless there is a proper foundation: that the witness possesses knowledge outside of the education, knowledge and experience of the judge.
The problem is that people think they know what they are talking about when they refer to securitization. A common quote that I often hear is “well, we know that the loans were securitized.” Well, we don’t know that. In fact, we don’t even know if the transactions were “loans.” The fact that the homeowner was seeking a loan doesn’t mean that’s what he received.
Many of the “experts” who seek to testify do not have a background in law enforcement (like Bill Paatalo) or rigorous educational training and experience in testing whether a manner that is asserted can hold up under the pressure of interrogation or scrutiny (Dan Edstrom).
But even they are probably more valuable as fact witnesses than opinion witnesses. Both have been known to influence the outcome of litigation in favor of the homeowner because they produced facts that revealed the absence of any evidence supporting the truth of the matters argued by opposing counsel.
Their opinions, like my opinions, can be extremely useful in connection with enforcement of reasonable discovery demands and even drafting the reasonable discovery demands.
It is one thing to go out on a limb and give the opinion that the loan account does not exist, at least on the books and records of the actor who was named as the claimant.
It is quite another thing to stay within a margin of safety by asserting that it is impossible to determine whether the loan account exists, because the only thing that has been revealed is the announcement, allegation, assertion or argument that the loan account exists.
You need to be aware of the fact that the opposition is going to argue that they have a right to claim administration, collection and enforcement of the note and therefore a right to foreclose on the security instrument (the mortgage or deed of trust ) without owning an unpaid loan account or even representing anyone who owns such an account.
Such a position is usually sustained for purposes of pleading. But homeowners have repeatedly won by demanding corroboration of the claim’s existence apart from the physical documents comprising the promissory note and the mortgage.
But this is circular logic. The implied allegation is that the note and mortgage exist because there is an underlying obligation owed to a creditor, on whose behalf the foreclosure would occur if the proceedings are successfully concluded for the lawyers who are supposedly representing a client owning the underlying obligation. You have a right to ask for corroboration of that assertion.
If the lawyers cannot or will not corroborate it with evidence, then they are stuck with just having made an “announcement” that was not founded on fact.
So what you are looking for is professional guidance as to the truth of the matters asserted, the truth of the matters that are implied, and the truth of the matters that are assumed.
You can use the work of forensic analysts to identify the specific areas of inconsistencies and gaps in the foundation asserted in support of the claim.
Their opinions regarding the limits of their own work in answering questions like whether the claim actually exists, or whether the actor who is named as the claimant actually owns the claim, can be highly persuasive (and usually is highly persuasive) to most judges most of the time.
As to establishing the credentials of the witness whom you wish to present as an “expert,” you have a chicken and egg situation. The truth is that the witness probably does know much more than the judge knows and could guide the court toward the truth of the matters being asserted. The problem with that is that the skill and expertise of the witness will not become apparent until he or she actually testifies.
So procedurally, you want to convince the judge to allow the testimony subject to a determination after testimony about whether such testimony would be allowed as that of a fact witness or an expert witness rendering opinions.
The latter is highly important if you wish to substitute the expert witness’s opinions for a presentation of facts that rebut the case presented against the homeowner.
The judge will not be inclined to believe any of that until the witness can demonstrate the inconsistencies and gaps – and the personal knowledge of dozens or hundreds of other cases involving the same parties.
It is only then that most judges will concede that there are gaps in their own knowledge regarding the importance of claims based on an assumption of securitization of an unpaid loan account.
Arguing that ahead of time will either result in a refusal to admit the testimony of the witness, or granting the request for the witness to testify about opinions of fact, and then giving that testimony literally no weight in the consideration of the facts in the rendering of the verdict.
I have sent the blind copy of this email to both Paatalo and Edstrom. If either of them is available, they will contact you.
Facts About Bad Mortgage Loans
How significant a risk is noncompliance with consumer protection laws?
The mortgage industry is struggling to comply with consumer protection laws. A remarkable report published by the FDIC Office of the Inspector General reveals that during 2005 (which was the peak year of the mortgage boom measured by number of loans originated), 83% of federally supervised banks that made loans were cited for patterns of "significant compliance violations." The percentage was presumably higher for state-licensed, non-depository lenders who were responsible for originating 52% of subprime mortgages and are subject to a much broader patchwork of state regulation. Violations of consumer protection laws can result in rescission (effectively canceling the loan), defense against foreclosure, fines, penalties and (both civil and criminal) damages that can exceed the original principal balance of the loan.
You may download the report (Report Number 06-024) from the FDIC website. There are also additional reputational risks associated with charges of predatory and discriminatory lending. Investors - including anyone in the chain of title for whole loans and the securitization trust for securities - can be liable, even though the violator waste broker or originating lender. In other words, the investor can be held liable and suffer damages for actions outside its control and for which had no knowledge. What consumer protection laws does FRAUD STOPPERS PMA cover and how are these compliance requirements applied to a mortgage loan?
FRAUD STOPPERS PMA provides a comprehensive analyzes of electronic loan data to determine whether a mortgage transaction complies with over 300 federal and state consumer protection laws related to mortgage lending. Specifically, FRAUD STOPPERS PMA automated mortgage compliance audits reviews mortgage loans for compliance with the following consumer credit issues: truth-in-lending disclosures, usury, predatory lending, impermissible fees, interest rate accrual restrictions (such as negative amortization and balloons payments) and prepayment penalty enforceability.
It is important to understand that any number of laws may apply to a particular mortgage transaction. Knowing which laws apply is not a simple task, since it depends on how the lender is licensed or chartered. Licensed lenders operate under the licensing authorities of the various states with which they do business. Most states have multiple licenses granting lenders the authority to make loans. Each such license imposes different substantive requirements governing loan terms. For instance, certain licenses allow subordinate lien loans while others govern loans with higher interest rates.
In some states, more than one license may authorize lenders to make the same loan, although subtle differences in the consumer protection requirements apply to the loan terms. FRAUD STOPPERS PMA determines if lenders and brokers are properly licensed (and in good standing) or exempt, and then applies the correct laws based on that licensing status. It does this by leveraging its proprietary nationwide licensing database, described in the License Verification and Monitoring section of this site.
Chartered financial institutions—such as state and national banks and federal savings banks—are subject to different regulatory requirements. For instance, most chartered institutions “export” interest rates from their home state to the target state in which the loan is made. This results in a complex synthesis of both the home state’s and target state’s consumer protection laws —an analysis that is difficult to perform efficiently without automation. Likewise, chartered institutions may in certain cases preempt states laws and in other instances must observe them. Again, FRAUD STOPPERS PMA bases its reviews on how an institution is chartered and what permissible regulatory elections it is making.
Once the lender’s license or charter authority is known, as well as its elections, the review must consider the specific transaction terms—such as the APR, interest rate, loan balance, lien position, occupancy type, etc.—to determine which out of the several laws that might apply to the lender govern a particular mortgage loan. No other automated compliance solution provides this degree of detail and precision to its analysis, and this is the reason no other provider equals FRAUD STOPPERS PMA in quality.
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