Knife or Spoon: Choosing Foreclosure Defense Tools

The Right Tool for the Job

Which instrument would you use to cut your steak? A spoon might eventually get the job done, but the results will be sloppy and crude. You need the right instrument at the right time to achieve the results you want.

The same is true when you argue a foreclosure case in court. I have seen homeowners lose cases they should have won because they used the wrong words in their pleadings. Improper terms give misdirection to the litigation. Admissions are made time and time again with no thought to the consequences. A quiet title investigation ensures your arguments are backed by properly gathered evidence. As the old saying goes, ignorance of the law is no excuse.

The Danger of Imprecise Language

An improperly worded argument has severe implications when presented to a judge. The judge can only rule on what you put in front of him. If you say, “My loan has been sold to a third party,” what do you actually mean? Have you defined what “loan” means in this context? Are you talking about the Tangible Promissory Note? The Mortgage or Deed of Trust? The Intangible Payment Obligation?

You need a clear and concise understanding, expressed correctly and precisely. Do you actually know if what you are writing is what you are conveying to the parties reading your pleadings? This is a problem I see in case after case, and it needs to be corrected.

The courts deal in specifics. When you use vague terminology, you leave the door open for opposing counsel to define your words for you. Once they define the terms, they control the narrative. Once they control the narrative, they control the outcome. Precision in language is not a luxury. It is a necessity.

Specificity and Particularity

Start with specificity, which means the quality of being specific, and particularity, which means attention to detail within your arguments. In stating facts and statutes, an education in your state’s version of the Uniform Commercial Code (UCC) as it applies to negotiable instruments is a worthwhile investment.

Understanding the Uniform Commercial Code

The UCC governs negotiable instruments, and your state has adopted some version of it. Understanding how Article 3 (Negotiable Instruments) and Article 9 (Secured Transactions) apply to your mortgage loan is fundamental. The Tangible Promissory Note is a negotiable instrument under UCC § 3-104. Its transfer is governed by UCC § 3-203. If those rules were not followed, the transfer may be invalid.

This is not theoretical. I have seen cases where the difference between winning and losing came down to whether the homeowner could articulate precisely which section of the UCC was violated. When you can show the court exactly how a transfer broke the chain of custody of your note, you give the judge a clear legal basis to rule in your favor. A chain of title analysis provides the documented evidence to support these arguments.

Learning From Past Cases

Along the way, it helps to start reading past cases dealing with similar issues. When you investigate these cases, you develop an understanding of what is being said over and over in these courts. Not much at all. What is being said is not what has happened in any way, shape, or form. Yet these writings would have you believe otherwise.

What the Foreclosing Parties Rely On

The foreclosing parties rely on fancy wordcrafting and misstating of information, along with misdirection in the many types of arguments presented to the courts. It is this false information that gives way to bad precedent being set with bad case law and citations.

In addition, defense attorneys and homeowners themselves often give poor and misstated information, along with admissions and misdirection in the arguments they try to articulate. In giving incomplete arguments with incomplete statutes, bad case law is spewed forth. It is this bad case law that must be overcome and defeated with the correct arguments and correct statutes as they apply to the foreclosure action at hand.

Leveling the Playing Field

We need to level the playing field, and we can do so by learning. In learning, we become better equipped to understand the rules. The rules have always been there. No one has bothered to look at them, let alone play by them. When you understand the rules, you can hold the other party’s feet to the fire.

Federal Rules of Civil Procedure

Those rules include the Federal Rules of Civil Procedure. For example, Rule 26: Duty to Disclose; General Provisions Governing Discovery. This rule requires parties to disclose information without awaiting a discovery request. The foreclosing party must produce documents that support their claims. Too often, homeowners and their attorneys fail to use these discovery tools effectively.

When you understand that the party foreclosing must produce evidence of their right to enforce the note, and you use discovery to demand that evidence, you force them to either produce it or admit they cannot. In Carpenter v. Longan, 83 U.S. 271 (1872), the Supreme Court held that the mortgage follows the note, and the two are inseparable. If the foreclosing party cannot produce the note, they cannot foreclose. The principle is simple. The execution requires knowledge and persistence.

The Power of Knowledge

With knowledge, you are empowered to go forth and right the wrongs. The investment in understanding the law, the rules of procedure, and the specific language of your pleadings pays dividends that no attorney can provide if you do not understand it yourself.

Even if you have an attorney, you need to understand what is being filed on your behalf. Read every pleading. Question every admission. Make sure the words used in your filings mean what you intend them to mean. A single careless stipulation or an improperly defined term can undermine an otherwise strong case.

The other side has armies of attorneys and unlimited resources. What they do not have is the truth on their side when the securitization process broke the chain of title and separated the note from the mortgage. Your weapon is precision. Your shield is knowledge. Use them both.

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Joseph Esquivel, Mortgage Compliance Investigators. Copyrighted, all rights reserved.