Home Foreclosures: 8.3.6 Other Evidence Issues in Foreclosure Litigation: Judicial Notice and Presumptions
Not infrequently, issues about judicial notice will arise in foreclosure cases.
Not infrequently, issues about judicial notice will arise in foreclosure cases.
Mortgages, deeds of trust, and assignments of them are typically self-authenticating.122 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.”123 Generally, howev
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.
Foreclosure notices, when offered as proof of compliance with requirements of the mortgage or related statutes and not to prove the truth of the statements in the notices, are not hearsay235 and do not require proof under Fed. R. Evid. 803(6) in order to be admissible.236 While a party offering such operative documents may not need to comply with the proof requirements of Fed. R. Evid.
A “personal knowledge” requirement applies to in-court testimony as well as to affidavits submitted in support of a written motion for judicial relief.147 “Affidavits asserting personal knowledge must include enough factual support to show that the declarant possesses that knowledge.”148 Virtually no servicer witness will have personal knowledge of the details of any loan, because that witness was not present at the loan closing and will have had no day-to-day involveme
The evidentiary rules relating to the authentication of documents arise out of the requirement that evidence offered must be relevant to the matter in issue.97 A document offered to prove a fact can be relevant only if the document is actually what it purports to be.98 Some forms of documents are deemed to be sufficiently trustworthy on their face so as to be self-authenticating,99 while the authentication of other forms of documents requires additional
A “personal knowledge” requirement applies to in-court testimony as well as to affidavits submitted in support of a written motion for judicial relief.149 “Affidavits asserting personal knowledge must include enough factual support to show that the declarant possesses that knowledge.”150 Virtually no servicer witness will have personal knowledge of the details of any loan, because that witness was not present at the loan closing and will have had no day-to-day involvement with the servicing of t
As noted in NCLC’s Home Foreclosures,177 operative documents such as promissory notes178, mortgages and deeds of trust, and assignments of mortgages and deeds of trust are not considered to be hearsay, and therefore their admissibility would not require proof of the elements of the business records exception.
Not infrequently, issues about judicial notice will arise in foreclosure cases.
Lenders that foreclose through judicial proceedings typically move for summary judgment after the homeowner has filed an answer or otherwise appeared in the case.
The following techniques may help the homeowner to defeat summary judgment in a judicial foreclosure on grounds that appear routinely in the lender’s evidence:
Inflating appraisals and property flipping are two deceptive activities that often go hand-in-hand but can also occur independently.59 Inflated appraisals can be used by mortgage brokers and loan officers to earn extra fees and commissions or to otherwise increase lending volume. Where a property has a higher loan-to-value ratio than permitted by the lender’s underwriting guidelines, inflating the appraised value of the house may get the transaction approved.
This subsection focuses on liability for statutory damages of an originator (e.g., loan broker), servicer, assignee, or settlement agent where that entity violates the TILA requirement. This subsection also reviews an assignee’s TILA liability for the actions of its agent, the servicer.
When a servicer fails to meet its responsibilities under TILA, consumers may pursue the holder of the debt for the servicer’s misconduct. Holding the creditor or assignee liable likely results in an offset against any debt owed by the homeowner and may save the home from foreclosure. It can also simplify litigation by reducing the number of parties.
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.264 In some cases, the owner may be the entity that originated the loan.
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.267 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.
Whether the mortgage owner can be held liable for servicing abuses will turn on whether the servicer is considered an agent of the mortgage owner. Where an agency relationship exists, the mortgage owner generally is liable.
A subagent is an entity appointed by the agent of the principal.
Special issues arise when a servicer acts on behalf of a loan owner that is a federal governmental entity. Most often, this occurs when one of the government-sponsored enterprises (GSEs), such as Fannie Mae or Freddie Mac, owns the borrower’s mortgage loan. In these situations, a court-created rule known as the Merrill doctrine may limit application of otherwise controlling agency principles.
Few events are more devastating to a family than the loss of a home to foreclosure. Children may be forced to change schools and leave friends. A family may be distanced from workplaces and social support. The homeowner’s equity is often lost as a result of a foreclosure sale, and it is not unusual for the foreclosed homeowner to find that they are personally liable for a large deficiency. Wages may be threatened to pay the deficiency judgment, further contributing to the family’s financial distress.
The practices of servicers that give rise to claims under the Real Estate Settlement Procedures Act (RESPA) are discussed in Chapter 3, supra, and those under the Truth in Lending Act (TILA) and other federal statutes are discussed in
While a UDAP claim will normally name a corporation as defendant, there may be reasons to add the corporation’s agents as defendants as well. UDAP statutes reach individuals as well as corporations.19 Both employees and non-employee agents of the corporation can be liable.20 If both the agent and the corporation committed the deceptive acts, each is liable for the entire UDAP award.21
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.
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.