August 20, 2010 by Neil Garfield

UPDATE: This is THE OUTLINE of a plan that is current in its evolution but by no means
complete or the last word. It replaces the entry I made in February of this year. The assumption
here is that even without taking mortgage foreclosure cases into consideration, the percentage of
cases that actually go to trial is between 5%-15% depending upon how you categorize “cases.” On
the other hand, if you are not prepared for trial and counting on settlement, your opposition will
generally know it and have the upper hand in negotiating a settlement. They are going to play for
keeps. You should too. Don’t assume that the note in front of you is the actual original. Close
inspection often reveals it is a color copy.

And for heaven sake don’t stand there with your mouth hanging open when someone says
you are looking for a free house. You are looking for justice. You had your purse snatched in
this transaction, you know there is an obligation, but you also know that they didn’t perfect
the security interest (not your fault) and they received multiple payments from multiple
parties on these securitized loans. You want a FULL accounting of all such transactions to
determine what balance is due after insurance payments, who is subrogated or substituted on
claims, and an opportunity to negotiate a settlement or modification with someone who
actually has advanced money on THIS transaction and can show it to be so.

WORD OF CAUTION: IF YOU ARE ALREADY IN PROCESS, YOU ARE REQUIRED

TO ACT WITHIN THE TIMES SET FORTH BY STATE LAW, FEDERAL LAW, OR
THE LAWS OF CIVIL PROCEDURE. FAILURE TO DO SO LEAVES YOU IN AN
UPHILL BATTLE TO REVERSE ACTIONS ALREADY TAKEN. ON THE OTHER
HAND ACTIONS ALREADY TAKEN “FIX” THE POSITION OF YOUR OPPOSITION,
SINCE THEY CAN NO LONGER ASSERT CHANGES IN CREDITOR, LENDER OR
TRUSTEE. THUS IT MIGHT BE EASIER, ACCORDING TO SOME SUCCESSFUL
LITIGATORS OUT THERE, TO WAIT UNTIL THE SALE HAS OCCURRED AND
THEN ATTACK IT AS A FRAUDULENT SALE, THAN TO TRY TO STOP IT WITH A
TEMPORARY RESTRAINING ORDER ETC.

CONSIDER BANKRUPTCY, ESPECIALLY CHAPTER 13, WHERE THERE ARE MORE

REMEDIES THAN YOU MIGHT THINK IF YOU FILL OUT YOUR SCHEDULES
PROPERLY. WE ARE SEEING BETTER RESULTS IN SOME BANKRUPTCY COURTS
THAN FEDERAL OR STATE CIVIL COURT PROCEEDINGS.
1. Get your act together, stop fighting amongst the members of your household and make a
decision as to what you want to do — fight or flight?
2. GET SOME HELP NO MATTER WHAT YOU DECIDE. GET THE LOAN SPECIFIC
TITLE SEARCH, GET A SECURITIZATION SEARCH, AND GET A LAWYER
LICENSED IN THE COUNTY WHERE YOUR PROPERTY IS LOCATED AND MAKE
SURE HE/SHE IS NOT STUCK ON THE PROPOSITION THAT YOU SHOULD LOSE.
3. If you choose flight, then by all means try the short-sale or jingle mail strategies that have
been discussed on this blog. Do not try to make money on the short-sale, since nobody is
going to give it to you. You can make a few dollars by riding out the time in foreclosure
without making payments (and hopefully saving the money you would have paid) and by
negotiating as high a price (a few thousand dollars) as you can in a deal known as “cash
for keys.” Even for this, you should employ the services of a local licensed attorney — at
least for consultation. There are several short-sale options that have evolved. Google Edge
Simonson or Prime financial. I’ve been working on a short-sale-leaseback option that
seems to be picking up steam.
4. STRATEGIC DEFAULTS RISING: More and more people of all walks of life including
those that have some considerable wealth, are walking away from these properties that
were the subject of transactions in which the presumed value of the property was
preposterous. This is an option that scare the hair off the pretender lenders because it pouts
the power in your hands. They in turn are trying to scare the public with threats of
deficiency judgments etc and collections. It is doubtful that many or indeed any deficiency
judgments would be awarded, even if they were allowed. But in many cases, particularly in
non-judicial states, deficiency judgments are NOT allowed. A version of the strategic
default that many people like is to stay as long as possible without paying and then walk. If
you are smart about it, you raise your own capital by socking away the payments you
would have made.
5. If the decision is fight — then the second decision to make is to answer the question “fight
for what?” If you want to buy time, there are many strategies that can be employed, which
basically are the same strategies as those used if you are fighting for real. And you might
be surprised by the result. Some people get a year or two or even more without payments.
You are going to take a FICO hit anyway so why not put some cash in your pocket while
you hold back payments.
6. AVOID crazy deals where you give your property or share your property with a stranger. If
you persist in engaging such people at least call references and make sure the references are
real. Ask questions about their situation and how they feel it worked out to them. Get as
much detail as possible.
7. AVOID mortgage modification firms. If you persist in engaging such people at least call
references and make sure the references are real. Ask questions about their situation and
how they feel it worked out to them. Get as much detail as possible. My opinion is that if
they don’t pursue an aggressive litigation strategy the statistical probability of you
accomplishing anything by going to them is near zero.
8. In all cases, if at all possible:

(a) Get all your information together along with a short executive summary of your
“journal” (even if you create the journal now). That means all closing documents, any
information you have on title, recording in the county recorder’s office, the names of all
parties who were “at” closing (that means not just the actual people who were there, but he
names of companies that were represented or mentioned at closing). Also, include in the
file any notices of default(NOD) or notice of Trustee sale (NOTS) or summons from a
court.

(b) Get a MORTGAGE ANALYSIS of the loan transaction itself. THIS INVOLVES
THREE PARTS — (1) LOAN SPECIFIC TITLE SEARCH AND CHAIN OF TITLE,
EXAMINATION OF THE DOCUMENTS, SIGNATURES, AND DATES OF
DOCUMENTS PURPORTING TO BE REAL, (2) SECURITIZATION SEARCH THAT
CHASES THE MONEY TRAIL AND WILL PROBABLY LEAD YOU TO SOME
IMPORTANT ISSUES LIKE THE VERY EXISTENCE OF THE “TRUST” ASSERTING
IT HAS THE RIGHT TO FORECLOSE AS WELL AS MONETARY ISSUES SUCH AS
APPLICATION OR ALLOCATION OF PAYMENTS RECEIVED BY THE INVESTOR
WHO ADVANCED THE FUNDS FOR THE LOAN AND (3) COMMENTARY AND
ANALYSIS THAT IS USABLE BY AN ATTORNEY IN COURT SUCH THAT HE/SHE
CAN ARGUE THAT THERE ARE QUESTIONS OF FACT ENTITLING YOU TO
PURSUE DISCOVERY. IF YOU WIN THAT POINT YOU ARE ON YOUR WAY TO A
SUCCESSFUL CONCLUSION. BUT NOBODY IS GOING TO MAKE IT EASY FOR
YOU.

(c) Who is your creditor? The TILA Audit alone does nothing without taking further steps.
The Trustee’s “Take-down” report should be demanded in non-judicial states and if the
house is in foreclosure, your written objection should be sent to the Trustee.

(d) If someone tells you they are “pretty sure” or can “definitely” stop your foreclosure or
promises a favorable outcome, and asks for money up front, then run like hell. This is a
scam. IF THEY TELL YOU THEY WILL DO WHAT THEY CAN, AND THEY GIVE
YOU SOME EXAMPLES OF WHAT THEY WILL BE DOING FOR YOU THEN
LISTEN AND GET REFERENCES.

(e) Only a Court order stops foreclosure or a Trustee Sale. No letter of any form or
substance will stop it unless the other side is intimidated into stopping the action,
which sometimes happens when they know their paperwork is “out of order.”

(f) Get a Forensic Mortgage Analysis Report OR AN EXPERT DECLARATION that

summarizes in a few pages the potential issues that you should be investigating AND
WHICH LENDS SUPPORT TOY OUR DENIAL OF THE DEFAULT, DENIAL OF
THE RIGHT OF THE OPPOSING PARTY TO CLAIM A DEFAULT, DENIAL OF
THE RIGHT OF THE OPPOSING PARTY TO FORECLOSE.

(g) Get an Expert Declaration that uses the forensic report and the expert opinions of
specific experts (like appraisers, title analysts) and which identifies the probable chain
of securitization and the money trail. You’ll be surprised when you find out there
were two yield spread premiums not disclosed to you and that they can total as much
or more than the “loan” itself. GET EXPERT OPINION ON PROBABLE
DAMAGES INCLUDING RETURN OF UNDISCLOSED FEES, INTEREST, ETC.
(SEE LAWYER’S WORKBOOK FROM GARFIELD CONTINUUM).

(h) Send the Forensic Report and expert declaration to the known parties, with an
instruction to forward it to all other parties known to them in the securitization chain.
Include a Qualified Written Request(QWR) AND a Debt Validation Letter(DVL)
(which is really a debt verification letter). Don’t be surprised if your pretender lenders will
come back and tell you your QWR is defective or improper in some way, but that’s OK,
you have followed statutory procedure and they didn’t. With the help of an attorney and
with consultation with your experts decide on what resolution you will demand —
damages, rescission, etc.

(i) Don’t believe a word about modification. Practically none of them go through. They are
leading you into default so they can collect more service fees, and get money out of you
that you think is stopping the foreclosure.

(j) Don’t believe a word that any pretender lender or representative says or represents, even
if they are a lawyer, particularly verbal communications that they refuse to confirm in
writing. Challenge everything.

(k) Don’t accept any document as authentic. Many documents are being
fabricated or forged, including affidavits. This is why you need a lawyer and
an expert and a Forensic mortgage analysis — to determine what documents
and parties are suspect and what you should be asking for in discovery and
in the QWR and DVL.

(l) YOUR FIRST STRATEGY IS TO RAISE NOT PROVE ISSUES OF FACT. BY

PRODUCING A FORENSIC REPORT AND EXPERT DECLARATION, NEITHER
YOU NOR YOUR LAWYER NEEDS TO ACQUIRE EXPERTISE IN
SECURITIZED LOANS. YOU ONLY NEED TO RAISE THE ISSUE OF FACT BY
 SHOWING THE COURT THAT YOU HAVE EXPERTS WHO SAY THE
PRETENDER LENDERS/TRUSTEES ETC. ARE NOT CREDITORS AND NOT
AUTHORIZED AGENTS WORKING FOR THE CREDITORS. THEY SAY THEY
ARE IN FACT THE CREDITORS OR HAVE SOME AUTHORITY GRANTED BY
AN ALLEGED CREDITOR. IT IS NOT FOR THE COURT TO ACCEPT ONE
VIEW OR THE OTHER, BUT RATHER TO ALLOW DISCOVERY AND AN
EVIDENTIARY HEARING ON THE ISSUE OF STANDING (SEE MANY
RECENT CASES REPORTED SINCE FEBRUARY ON THIS BLOG).

(m) Be very aggressive on discovery. They will argue that even if they are not the
creditor and even if they refuse to disclose the identity of the creditor, they are still
entitled to disclose because they are the holder of the note and/or mortgage. Your
argument will probably be that they still have a duty to disclose the identity of the
creditor and the source of the their authority to represent the creditor, along with
proof that the creditor has received notice of these proceedings.

Neil Garfield is an attorney with a background on Wall Street. His website is self-help. He offers
courses, audits and he opines. Neil is not offering his legal services with this posting. Always
consult a competent attorney.