What to do if the foreclosure mill refuses to give you an answer about ownership of the “loan”

Here is what I wrote back:

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As unusual PennyMac (or Ocwen or whoever) claims that it purchased a specific loan (usually in bulk). So we all know that a claim is good for pleading but litigation is not about “because I said so.” It’s about proof as admitted by the judge.

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In this case the discovery question is simple: who is the party from whom you acquired ownership of the subject loan in exchange for payment of value? They can’t answer that because no such person or entity exists. When you say “they cannot identify” does that mean you have submitted formal court discovery to them and they failed or refused to answer?

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If you mean that you have asked by phone or standard letter and they couldn’t or wouldn’t say who they paid, that fact — the non answer — will have very little legal probity in the case.

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If you mean that you asked in a Qualified Written Request or Debt Validation Letter, then you have invoked administrative process. Failure to answer that question is a failure to establish the single most important question of the case — is the claimant the owner of the underlying obligation (because it paid real value in exchange for a conveyance of ownership of the subject debt, note or mortgage (DOT)? That is, after all their claim if they are claiming ownership or claiming purchase.

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If the named claimant is the owner of the underlying debt then the claimant is the owner of the loan account and can claim a financial loss resulting from nonpayment by the homeowner. Since they have suffered financial damage they are entitled to redress through the courts and that includes judgment on the debt, judgment on the note and judgment on the mortgage (or all three).

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If the named claimant is NOT the owner of the underlying debt then the claimant is NOT the owner of the loan account and cannot claim a financial loss resulting from nonpayment by the homeowner. Since they have not suffered financial damage they are not entitled to redress through the courts and they have no right in law or equity to a judgment on the debt, judgment on the note and judgment on the mortgage (or all three).

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So if administrative process in invoked and they refuse to answer (always the case) then you file complaints with the CFPB and state AG that says, in summary, I am being coerced into a relationship with PennyMac despite the fact that they will not reveal any transaction in which it acquired ownership of my obligation. PennyMac is neither my original lender or table lender nor a successor to anyone who was the original lender or table lender. Its response is required under applicable law. They won’t answer or they are admitting informally that they are unable to identify the transaction except by date but without any information about the “seller” whom they say they cannot identify.

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Lying to AG and CFPB carries some fairly hefty penalties so the banks try to steer clear of flat out lying to those law enforcement agencies. So you usually will find inconsistencies between their answer to the CFPB complaint and what they have previously sent you. You can use those effectively in court as admissions against interest. There will always be inconsistencies because none of what they are saying is or ever was true. But it isn’t up to the judge to dig. It is up to you as litigant to put these inconsistencies squarely in the face of the judge and be able explain in clear persuasive language why this is important.

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If you mean that you asked in formal court discovery, that is an entirely different story. That fact that you asked is relevant. The fact that they didn’t or couldn’t answer is relevant.  And the fact that they failed or refused to answer even after the court entered an order compelling the answer is relevant because you file a motion for sanctions asking for monetary penalties and striking their pleadings.

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Then after they still don’t produce the answer you are in the very strong position of filing a motion in limine — unless the court has already entered an order striking the pleadings of the claimant.

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You cannot pursue a claim if you are unwilling to say how you got hurt. If you are claiming loss from nonpayment you must show entitlement to payment. Otherwise nonpayment is irrelevant. A quick summary of the law is that if the inferences and presumptions arising from allegations of the complaint or exhibits are properly challenged, the homeowner is entitled to rebut those inferences and presumptions.

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But the rebuttal does NOT consist of proving that the claimant does not own the debt, note and mortgage. The rebuttal arises when court rules prevent the claimant from introducing any evidence at trial that they own the debt, note or mortgage. So even if they did own it, and even if you did owe the money, they would still lose because they had not obeyed court rules.

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The fact that a “new loan” seems to have appeared is not dispositive. If there really was change of ownership it is perfectly acceptable for the new owner to change the labels. But more importantly it might be a clue. The new labels might be an indication that the loan data has been included in multiple “portfolios.” Although none of the portfolios consist of anything more than data about the loans instead of ownership of the loans, they all represent different securitization schemes. By challenging the current portfolio and demanding answers to questions about transfers of the loan you can uncover the fact that more than one “implied trust” is being named by underwriters and foreclosure mills as the successor lender.

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Just remember the paperwork introduced as exhibits to the foreclosure complaint or discovery or at trial in most cases is NOT facially valid because it requires the reader to pursue information that is not in the public record. A big error is NOT challenging the facial validity of a document. Failure to do that either waives many of your defenses or makes it a more difficult uphill climb.

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