The Show Me the Note strategy is a solid one if done properly but you can’t simply deny you owe a debt and get a free house.   You signed a promissory note to someone.  The question is to whom is the money actually owed and what is currently owed against it.  Why?

Quite simply many of the investment banks bought credit default swap and insurance to cover them if the loan (or the pool of loans) goes into default.  Yes, this means that AIG (or the U.S. Treasury with our tax dollars) might have chipped in to pay-off some of the “bad debt”.

That means that your loan balance might be lower than you know.

We have Freddie Mac ON RECORD admitting that they made payments to the investors on behalf of the homeowner. Yes, this means your tax dollars are being used to pay down mortgages.

So back to the main questions.

1. To whom is the debt owed?
2. How much is owed?

Thanks to Housing Doom for this quick tip-off on the article below.

- The Bank Slayer

The fourth time might be the charm for Andrew Bailey, who has been fighting BONY Melon over their right to foreclose:

Judge Curley, the head bankruptcy judge in Arizona just ruled minutes ago that the Bank of New York-Melon must produce the custodial records in their vault in a case against an Arizona homeowner, thereby producing the note and all other docs.

This is a transformational decision.

As Market Ticker explains:

This decision changes literally everything - at least for Arizona.  If it spreads, and it probably will, it will change everything period.

If BONY doesn’t have the documentation in their custody, with proper endorsements, then there’s gonna be trouble.  You can bet the banks will try to bury notice of this way off the front page, but they’re not going to get away with it.

The key issue here has always been whether the people buying these securities were really buying what they thought they were – and maybe whether they were buying anything at all.

Right now in the New York area it is estimated that judges are dismissing 20%-50% of foreclosure cases due to sloppy paperwork. So far though, no one has walked away with a free house:

The foreclosure dismissals in this area of New York have not delivered free homes for borrowers. With so much at stake, lenders in this part of New York are aggressively appealing foreclosure dismissals, which is likely to keep the legal system bogged down, foreclosed homes off the market, and homeowners … in legal limbo for years.

Homeowners might not be walking off with free houses, but many are staying in homes payment-free while the appeals go on.  Considering how long it is liable to take to straighten this mess out, that free ride could go on for quite awhile.

If you want to see the fourth appeal made by Bailey, you can see it here.

Show Me The Note!  Produce the Note!  This strategy has been circulating for a few years now and in many cases can give real pause to the mortgage servicer AND in some cases slow down the foreclosure process.  But this is not always a silver bullet.

Why?  Quite simply they may be able to either:

1. Produce THE ACTUAL note the borrower signed with proper indorsements.
2. Produce a FAKE note which looks like the real note.

Recently, an attorney for a foreclosure mill here in Texas walked into court and “produced” the note the day of opening remarks for trial.

Amazingly, they had been unable to produce even a copy with the proper indorsements for almost a year but then “poof” like magic they suddenly had the note?  Seriously?

Neil Garfield addresses this in a recent post below:

- The Bank Slayer

WHEN THE NOTE SHOWS UP

FROM T BROWN:

To all, I don’t see why we are getting mad at each other , we need solutions. I’m fighting just like everyone else is; but everybody i tell my story too, tells me I’m ahead of the “game”. I have the original NOTE signed in blank in my hands. I’m not the bank the original NOTE has not helped me one bit, and no one not even Neil has made a suggestion as to what I do next. The NOTE is all powererful in the hands of the bank , but when it is in the hands of a “layman” it is worthless and before anyone asks I’m in South Carolina.

FROM THE EDITOR: Actually I CAN tell you what to do when the note shows up.

• First of all don’t assume it IS the note even if it appears to match the copy you have. When they come up with the “note” there is a high probability that technology (fabrication and forgery) was involved. Personally I was sitting on the witness stand as an expert witness when the opposing attorney handed me the “original note.” He said “I am handing you the original note.” And then he asked “You are holding the original note in your hands, isn’t that correct?” And I said I don’t know since I am not familiar with the signatures and I have not inspected the note. And he asked if I would concede that if the signatures were in fact those of the borrower, that this was the original note. Now I was a litigator for 30 years and I teach other lawyers how to litigate these issues. You have to think things through. Why would the lawyer ask a perfect stranger if this was the original note. Answer because he has nobody else to testify that it it is the original note. Why not? So he was looking to get the paper into evidence by an admission from the borrower’s expert that the note was the original when it was being presented (and had never been shown before that morning) for the first time. Something smelled fishy. “Wait a minute,” I said, “I need to inspect this.” After a few minute of looking carefully at the note I said “I am an opinion witness, and in my opinion this is not the original note. It is a printed fabrication using a color printer. The signatures appear deep and dark and yet the there is no impression on the back of the paper. In my opinion, based upon the facts of this case and the repeated attempts to get the original note, I believe this was literally printed this morning.” “No further questions,” he replied.
• As for the note being signed in BLANK, this is a common. And if you can prove that it was blank when you signed it, you can challenge its admission into evidence simply because the terms of the obligation were not on it when you signed it. The argument is idiot-proof: the note can’t be evidence of the obligation (which normally the note is used for) because the terms of the obligation were not on the note. If they want to prove the obligation, they must find another way — like with witnesses who will actually say that the would-be forecloser (pretender lender) has lent money to the borrower (not true) or that the pretender lender has paid the party who appears on the closing documents and therefore is a real party in interest with standing to make a claim (also not true). They never can get a live witness to say that because it would be perjury. They ALWAYS use affidavits that are worded carefully to avoid the charge of perjury but which give the impression that the affidavit it attesting to facts when it is in fact doing no such thing and the person signing has no knowledge of the transaction independent of what is on the affidavit which was prepared by the lawyer and possibly never read by the person who signed it.
• As for the real original note appearing in court, THAT doesn’t end the inquiry. How did they come into possession of the note. Where did it come from? Mere possession of the note doesn’t give any more rights that non-possession. If you give a note to a courier to give to someone else, does that mean the courier can stop off at the courthouse and sue you? And if the note reaches the recipient, why was it being sent? was it being sent for safe-keeping or an an incident to a monetary transaction in which the recipient was the the intended assignee or indorsee of the note? These are the right questions and if pressed you’ll probably get the answers you were looking for.

The biggest mistake most people make is not knowing basic rules of evidence.

Testimony from a “copy” is inadmissible. Testimony is inadmissible unless it comes from a witness accepted by the court — not some lawyer lathering up his mouth and using finesse to escape the rules of evidence.   Every witness must be sworn, must have personal knowledge of the contents, must remember it ALL and be able to communicate it with specificity such that a court could rule without the court creating a document that had never been in existence before the evidentiary hearing.

Ever hear the old “buyers are liars”?  Some of attorneys are right there with ‘em. As soon as the Lawyer starts talking you should probably be objecting since he is not sworn, not a witness and never will be.

So what this means is that an affidavit that is sworn must be the “testimony” of a witness accepted by the court who has personal knowledge and is not reporting what was told to them by someone else and not be reporting what they read in another document.

Hats off to our friend Neil Garfield at Livinglies for a great piece on evidence.      Show me the proof!!!