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Hearsay Trap for Borrowers

Livinglies.com | April 12, 2017

By Neil Garfield

This case shows that hearsay evidence is admitted as long as it is a bank claiming an exemption. The witness, devoid of any actual knowledge, is allowed to testify about facts, events and circumstances about which he or she knows nothing. The Judge did enter judgment for the borrowers. But the 4th DCA reversed and ordered foreclosure. At some point the courts are going to roll back these pronouncements when and if the foreclosure crisis comes to an end. The precedent for other cases is against any written or unwritten doctrine. But in the meanwhile millions of people will still lose their homes to strangers without any financial interest in the loan.

The moral of this story is PREPARE and be RELENTLESS in what is always an uphill battle successfully defending foreclosure cases. And take it as far as you can to ward off an appellate decision that is based upon the "bank must win" doctrine.

The hearsay rule is one of the basic points of American jurisprudence. Many societies have grappled with the issue. On its face. it is a simple proposition: what to do with a witness, who appears in court, and whose testimony is proffered relating to a statement by someone else out of court? The answer in most societies is that the statement is barred simply because the opposing party has no opportunity to test the veracity of the statements, or even to test whether the statement was actually made by the out of court party who the witness says made it.

Some places require more corroboration (more witnesses) while others, like American jurisprudence, bar such statements outright for reasons stated in the U.S. Constitution and most State constitutions i.e., that the opposing party must have a right to cross examine the party making the statement in order for it to be admitted in evidence - - - except unfortunately in foreclosure cases.

Much of American jurisprudence has suffered an astounding number of retreats from the basic hearsay rule in this country. This has been coupled with appellate decisions expanding the hearsay "business records" exemption rule to the point where there is little scrutiny over whether the witness is competent and whether the statement is true. This is despite hundreds of case decisions that corroborate news stories in the public domain that reveal the absence of any real interest in the loans and the banks' practice of fabricating, forging and robo-signing paper that were badly defined as "documents" merely because they had the title of a presumed valid document.

The seminal study performed by Katherine Ann Porter when she was at the University of Iowa and many other studies in various parts of the country corroborating the counterintuitive conclusion that many and probably most promissory notes were destroyed shortly after signature leading inevitably to the only possible conclusion that the "notes" being used in foreclosures were neither real nor original; and despite the presence of a potentially valid cause of action to reinstate a "lost" promissory note, few, if any, foreclosing parties have actually proven or even alleged the "lost note" - - because they cannot admit or even tell the story of what happened.

So here we have the usual pattern. A series of parties, none of whom actually have any records (or financial interest), but who have access to a third party central repository (like LPS/Black Knight) of images and data that is carefully mined and fabricated to support the declaration of default, the acceleration of the entire balance due and the fabricated "right. to foreclose based solely on unsupportable presumptions and not the rules of evidence.

The trial judge in this case "erroneously" applied normal rules of evidence and concluded that the witness was neither credible nor knowledgeable about the "records" that the bank claimed was thoroughly "audited"(not true in any instance that I have seen). The culprits in this case are some of the usual predators – – Chase, PennyMac and Washington Mutual. The appellate court tossed the trial court's decision based upon the new doctrine of "the bank must win, even if everything they have done is wrong."

The cumulative and specific effect of such rulings by trial courts or appellate courts is to undermine the possibility of settlement and workouts, which then overloads the judiciary in each state - - - hearing cases that would otherwise be settled were it not for the fact that the ONLY way for the servicer to make money is to pursue foreclosure at the expense of both investors and putative borrowers. Thus the servicers "offer" settlements in the form of modifications that are not intended to actually happen, much less benefit either the investor or the borrower. Settlement is sued as a ruse to lure borrowers into an insurmountable default that in many cases would never have any basis in fact but for the wrongful illusions created by the servicer for the interests of the servicer.

What to do?

Practitioners should drill down deeper making it more difficult for trial judges and appellate panels to use the presumption that the documents are real and that the witness knows anything about the "loan" about which the witness is testifying. This requires intensive preparation of strong objections and aggressive cross examination that reveals as much as possible that the witness knows nothing, the "boarded" "documents" were neither "audited" nor "boarded" all pointing to a complete lack of foundation to get the so-called "documents" into evidence. It is the way I have won cases, and the way most successful foreclosure defense lawyers have won their cases.

 

 

 

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