Archive for January 4th, 2012

A Foreclosure “Audit”

My friend and colleague, Matt Weidner, just blogged about foreclosure audits, and this is a topic worth discussing. 

I’ve had a few clients facing foreclosure ask me if they should get an audit.  I even had a couple of clients who procured an audit on their own prior to retaining my firm.  Their intent, essentially, was to convince the court, in defense of the pending foreclosure case, that their Note/Mortgage had already been paid, in whole or in part, at some stage of the securitization process. 

In his blog, Matt opines “the audit has zero value” unless it’s done by someone “qualified as an expert in a court of law.”  I totally agree.  To explain why, let me share a recent experience.  

One of my clients recently told me that he hired an auditor (which he procured prior to retaining me) and that, according to the auditor, his Note/Mortgage had been 85% paid off via the securitization process.  I asked for a copy of the audit, and, weeks later, I received literally dozens of pages of incomprehensive gobbley-gook.  It wasn’t even written in English – it was random numbers thrown together in a completely nonsensical way.  There’s no way any judge could read those documents and see that the Note/Mortgage had been 85% paid.  Heck, I couldn’t read those documents and conclude as much, and neither could my client.   

So I explained to my client that if we were going to get any value out of an audit, then the audit would have to contain a cogent, intelligent explanation showing that 85% of the Note/Mortgage had been paid.  Moreover, we’d have to bring the auditor into court, have him/her testify, and convince the court that he/she should be qualified as an expert. 

The client’s first reaction was to ask “Can’t I just tell the court the Note is 85% paid?”  My response?  “No, that’s not admissible in evidence if you were to so testify, as you don’t have personal knowledge of the payments.  So the Court could not consider your testimony on that issue.”

The client’s follow-up reaction was to express concern that the auditor lived in California, wondering if he could get on the phone and tell the judge the Note was paid.  My response?  ”No, the expert needs to come to court, show the judge his proof, convince the judge he’s an expert in this area, and convince the judge  the Note is 85% paid.” 

With that, we agreed to ask the expert to give us written documentation, which a judge or any layperson could understand, showing the 85% payments.  Additionally, the homeowner was to speak with his “auditor” and make him realize he’d have to testify at trial and be qualified as an “expert.” 

Let’s be clear here.  I have absolutely no aversion to the use of an audit.  In fact, if I can use an audit as a substantive defense in a foreclosure case, I’d be more than happy to do so.  To use the audit, though, I have to bring the auditor to court to testify, and I have to convince the court he/she is an expert.  That’s certainly possible, even if the auditor has never been qualified as an expert by a court previously (after all, there’s a first time for every expert).  My point, simply, is that before any homeowners rush out to pay for an audit, they should be aware of what’s required for that audit to do them any good in their court case. 

I suspect I’m going to get comments from auditors convincing me how their services are worthwhile.  That’s perfectly fine.  I’d love to see samples, but bear in mind – it must be something intelligible, something I could use to convince a judge of your position.

Mark Stopa

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The Ideal Presidential Candidate

Rick Santorum wants to outlaw all birth control, which nearly 100% of Americans use at some point in life, and he nearly won the Iowa Republican caucus.  Santorum lost, of course, to Mitt Romney, who showed just how out of touch he is with mainstream America when he challenged Rick Perry to a $10,000 bet during a GOP debate.  And these are the frontrunners, folks! 

All of this lunacy got me thinking … what would the ideal presidential candidate look like?  It’s not that difficult of a question, really.  A few simple campaign platforms would catapult him/her to the Presidency: 

1.  Have common sense.  Forget left or right, liberal or conservative, Democrat or Republican, I want a Presidential candidate with common sense.  Is that really too much to ask?  Don’t try to outlaw birth control when nearly every American uses it.  Don’t make $10,000 bets when that’s three or four months’ salary for the average American.  Exhibit a little common sense.  Act like a normal person – someone mainstream America can relate to. 

2.  Stop the bailouts.  The bailouts of the American banks were bad enough, but now the Fed is bailing out Europe.  Seriously?  Do you know how much traction a Presidential candidate would gain by speaking out against bailouts – and living up to his/her word?  How about this as a platform … “we’ve spent enough money bailing out everyone else, it’s time to bail out Americans.” 

3.  Side with the 99%.  Here’s the thing about the 1% – they’re only one percent!  If they get pissed off, then, well, it’s only one percent!  I’m not saying I’d actively try to alienate the 1%, but if it’s a question of appeasing the 1% or the 99%, is there really a question?  If I’m guilty of utilitarianism, then so be it, but shouldn’t the President be most concerned about the welfare of the most people?  (To clarify, I’m not a socialist, and I’m not saying money should be divided evenly.  My point is that it’s time to stop catering to the 1% and to be most concerned with the welfare of the most people.)

4.  No more wars.  Saying “no more wars” does not mean I don’t support the military.  It just means the military shouldn’t have to be there in the first place.  After all, how many trillions have we spent on foreign wars in the past decade?  And what, exactly has it accomplished?  I want to see the next President say ”I’m going to save the money we would have spent on wars to help the U.S. economy create jobs and improve the housing market and foreclosure crisis.”  Why is that so difficult? 

If a Presidential candidate did these four things – four very simple things that I drafted up in 20 minutes this morning – then I guarantee he/she would win the 2012 election and be revered for decades to come.  But alas, there is no such person running, which leaves me cold, bitterly disappointed, and wondering … why don’t these Presidential candidates get it?

Mark Stopa

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