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Home Foreclosures: 8.2.7.4 Corporate and Business Documents

Every state requires corporations and other businesses to file certain documents at the time the company begins operation in that state and periodically thereafter. The filing typically consists of the articles of incorporation and annual reports. When dealing with corporations, this information is helpful to figure out who stands behind the corporation or business in the event the corporate veil can be pierced or to sue these individuals separately. Further, formal links between the various parties to the transaction can establish a wide net of liability.

Home Foreclosures: 8.2.7.5 Securities and Exchange Commission Documents

Publicly traded corporations must file periodic reports with the Securities and Exchange Commission (SEC).62 Entities that must file with the SEC also include the trusts that are frequently involved in the securitization process. Reports filed with the SEC include information about the financial viability of the company to pay a judgment. A report may reference state and federal enforcement actions involving the institution, including consent decrees setting these enforcement actions.

Home Foreclosures: 8.2.7.7 Other Lawsuits

Obtaining complete information about other lawsuits against the same defendants is not an easy or inexpensive task. On the bright side, the existence of lawsuits filed in federal courts can be found by using the Public Access to Court Electronic Records (PACER).63 This is an electronic public access service that allows users to obtain case information from federal courts.

Home Foreclosures: 8.2.7.8 State Administrative Agencies

In recent years, state administrative agencies have taken increasing interest in the mortgage origination and servicing practices, especially where their licensees include industry actors such as brokers, mortgage companies, and foreclosure consultants. Some agencies post a substantial amount of helpful information online.

Home Foreclosures: 8.2.8.2 Confidentiality/Protection Orders

Federal Rule of Civil Procedure 26(c)(1) governs protective orders and permits a court, for good cause, to issue an order to protect from public disclosure trade secrets or other confidential research, development or commercial information, among other things. Without a protective order parties can disseminate materials produced in discovery.

Home Foreclosures: 8.3.1 Introduction

Foreclosure cases often involve hundreds, if not thousands, of pages of documents. Ensuring that documents necessary to prove your case are admissible is critical to a successful case. Conversely, excluding inadmissible documents offered by a lender or mortgage servicer can also affect the case outcome. This section considers the application of the Federal Rules of Evidence to various common foreclosure related documents.

Home Foreclosures: 8.3.2.2 Authenticating Promissory Notes

Where negotiable notes are concerned, U.C.C. Article 3 will mostly be controlling on authentication issues. While most first mortgage notes on the Fannie/Freddie Uniform Instrument form are negotiable, other forms of notes such as those evidencing home equity lines of credit (HELOCs) and reverse mortgages, and notes on specialized note forms, are not negotiable and therefore different rules of evidentiary proof may apply.105

Home Foreclosures: 8.3.2.3 Authenticating Security Instruments and Assignments

Mortgages, deeds of trust, and assignments of them are typically self-authenticating.124 However, mortgages, deeds of trust, and assignments, if offered as self-authenticating under Federal Rule of Evidence 902(8) must be “accompanied by a certificate of acknowledgment executed in the manner provided by law by a notary public or other officer authorized by law to take acknowledgments.”125 Generally, however, foreclosing parties will be permitted to offer such deeds and mortgages as self-authenti

Home Foreclosures: 8.3.3 Authentication of Electronically Stored Information

Servicers’ lawyers, and often trial judges, tend to ignore the authentication requirements for electronically stored and electronically created loan records such as loan history documents and payoff calculations, and instead focus solely upon the business records exception to the hearsay rule in Fed. R. Evid. 803(6). It is a great mistake for homeowners’ lawyers to allow the authentication rules to be ignored as these rules provide some of the most viable opportunities for successful defenses of foreclosure cases.

Home Foreclosures: 8.4.2.1 Overview

The most critical player in foreclosure defense cases is the mortgage loan owner. The owner is the party that has the right to enforce the note and foreclose on the mortgage or deed of trust.265 In some cases, the owner may be the entity that originated the loan. However, more commonly, mortgages are pooled and sold through the securitization process in which the ultimate owner is a trust, which holds the mortgage loan for the benefit of investors.

Home Foreclosures: 8.4.2.2 Liability for Originator Conduct

If the loan has been assigned, the homeowner will generally want to raise against the current mortgage owner the defenses that could have been raised against the originating lender.268 If an assignee has the rights of a holder in due course, however, it may be shielded from some liability for the actions of the loan originator.

Home Foreclosures: 8.4.3 Liability of Servicers and Others Involved in Servicing Loans

When a hierarchical agency relationship exists, advocates should consider every party in the chain as a potential defendant. While it is advisable to sue the owner of the obligation, there is no requirement that the owner be included. Servicers may be liable for the conduct of their vendors or subagents.317 At the bottom of the chain is usually an individual or employee.318 There may be tactical, evidentiary, or discovery reasons to include such individuals as defendants.

Home Foreclosures: 8.5.1.1 Overview

A federal forum is potentially available whenever the homeowner has a claim under federal law, such as the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA), Fair Debt Collection Practices Act (FDCPA), Fair Credit Reporting Act (FCRA), or federal Racketeer Influenced and Corrupt Organizations Act (RICO). State courts also have jurisdiction over claims under these federal statutes.

Home Foreclosures: 8.5.2 Staying in State Court

Lenders and servicers may prefer a state forum for several reasons, including avoiding the standing obstacles in federal court created by Ramirez. While homeowners have the right to bring many federal statutory claims, such as TILA or FDCPA claims in state courts, defendants frequently seek to remove these actions to federal court.382 If the federal court lacks Article III standing, it will remand the case back to state court.

Home Foreclosures: 8.5.3 Personal Jurisdiction over Out-of-State Defendants

Given the rise of mortgage securitization, it is now very common for out-of-state entities to be involved in cases related to residential home mortgages. If the homeowner brings an affirmative action against out-of-state entities, the court must have personal jurisdiction over those defendants. For cases brought in both state and federal court, jurisdiction over out-of-state parties will be governed by the state long-arm statute.394 Courts must also determine whether exercise of jurisdiction satisfies due process requirements.

Home Foreclosures: 8.7.4 Colorado River Abstention

An additional abstention doctrine, enunciated by the Supreme Court in Colorado River Water Conservation District v. United States,493 sometimes arises in federal challenges to foreclosures. Like the other abstention doctrines, Colorado River is a narrow exception to “the virtually unflagging obligation of the federal courts to exercise the jurisdiction given them.”494