(BREAKING NEWS, OP-ED)–The author of this post is a paralegal and consultant to trial attorneys and covers this case in his book, The FDCPA, Debt Collection and Foreclosures, an in-depth analysis of the paradigm shift in debt collection and foreclosure defense litigation strategies. DISCLAIMER: The opinions and case analysis expressed are that of his own and do not constitute legal advice.
Here we go again … another case in federal appeals court … another recognized attempt by a homeowner that failed when applied to the Spokeo v. Robins case handed down by the United States Supreme Court, 578 U.S. 330 (2016). See the case below:
While the case specifically denotes cases applicable to the Fair Credit Reporting Act, it has been judicially recognized in all 50 states as being the benchmark for proof of injury and raises the bar for such.
The case in chief is Foster v. PNC Bank, N.A. and wouldn’t you know it … Spokeo got tossed in for good measure because the homeowner (Foster) relied solely on his affidavit and couldn’t prove causation. See the case below:
To get to the nuts and bolts of Spokeo and how it was applied to this case, see pages 10-11 of the Foster ruling.
Page 11 of the Foster ruling clearly identifies that Foster lacks standing because the injury he is trying to prove happened is not fairly traceable and under Spokeo, it has to be an actual injury-in-fact! There’s no getting around this if you want Article III standing to pursue such a case.
It looks as if this case could have been done pro se. Most pro se cases fail because of 3 reasons: (1) lack of understanding and application of the Federal Rules of Civil Procedure; (2) lack of understanding of how case law should be applied; and (3) evidence based on emotion and not facts supported by evidence. Once you clearly read this case, you might understand why the author of this post thinks that way.
NOW … Why can’t Spokeo be applied to foreclosure cases?
Why can’t homeowners make the bank or REMIC Trust prove it suffered a concrete injury-in-fact under Spokeo? That question posits multiple answers because there is specific contract law involved.
Based on paralegal-level research, bringing any kind of claim against a creditor should be entertained BEFORE the real problems begin (like getting a notice of default). This author blames homeowners for not constantly checking their public land records for suspect documents, especially in the cases of REMIC trusts, wherein third-party document mills generally crank out manufactured documents that attempt to memorialize when a particular loan (mortgage or deed of trust and note) was actually conveyed into a REMIC trust pool. Sadly, most of the documents creep their way into the public record just before the foreclosure starts. And no one finds that just a little suspicious?
Even more unfortunate, because of the way the deck is stacked in court, judges don’t like giving homeowners free houses just because they come running and screaming into court with a two-dozen (or 200) page complaint, filled with emotion, conjecture and nothing concrete to back it up with, or, in the alternative, attempt to use all that wasted space to try to educate a judge towards their point of view with no attached exhibits or any other evidentiary process to back it up. This author has seen this in hundreds of cases he has reviewed, even by attorneys who thought they were good foreclosure mill attorneys (they miss stuff too)!
The key here, especially in REMIC trust cases (most of which are formed in New York or Delaware), there are commonalities that typically get overlooked and case law can and should be applied whenever possible to support whatever argument is being made. Unfortunately, many pro se litigants miss that opportunity and just continue to rant because they think they were unfairly treated by their mortgage loan servicer, who is the real party behind the foreclosure … not the closed REMIC. What? The REMIC was closed? When?
Does anyone bother to read the REMIC’s 424(b)(5) Prospectus and attempt to tie information into their cases? This author hasn’t seen much evidence of that lately because attorneys dealing in foreclosures believe the judge doesn’t care what happened to the loan if it went into a REMIC trust. This is where knowing how to pick your battles makes all the sense in the world. The Prospectus analysis in of itself can be extremely daunting and time consuming, unless you know where to look. Then you have to apply what you’ve discovered to your discovery to make sure what you think you know can stick in a court of law. It’s called securitization failure.
The bottom line however, is whether the REMIC settled with its investors at any point in time in its history or whether the mortgage loan servicer actually performed under the Prospectus agreement and made the payments of principal and interest as identified under the ADVANCES section of the REMIC’s own governing regulations. If the payments were made by the servicer (whether the Borrower paid them or not) … then who has suffered actual Article III concrete injury-in-fact under Spokeo. There’s the rub.
If the servicer has been paying the certificate holders and the action is being brought on behalf of the certificate holders based on borrower default … how’s that possible? The servicer has paid the monthly payments to the certificate holders, so where’s the concrete injury-in-fact? The borrower isn’t in default if this is happening, are they? Who brings that up in court? Who asks the court to determine an injury-in-fact? Hmmm.
Because the bank is trying to foreclose, the courts automatically assume they own the loan; otherwise, why would they be filing a foreclosure action in the first place?
There’s the other rub. If the case involves a REMIC trust, this author believes with a certainty that the mortgage loan servicer is playing “lender” and claiming it has the right to foreclose when it can’t prove actual concrete injury-in-fact based on contract law because it doesn’t have a contract with the homeowner. Yet, bank’s attorneys come into court and misrepresent those facts all the time in an attempt to create standing for a fictitious plaintiff (one that no longer exists in most cases).
Yep, none of this seems fair, does it? But, as any good paralegal can tell you, all of our collective work is research and if you don’t take the time to do it, you can’t prove anything and your case is dead in the water before you even get started.
Then there’s the other faux pas … suing everything under the sun because they’re identified with the REMIC. Example: MERS. Big waste of time. MERS is owned by the same company that owns the NYSE. Where do you think you fit into that financial scheme of things. MERS has more money than any pro se or attorney-supported litigant out there and will outspend you and give you nothing. Besides, from a paralegal’s standpoint, it adds well more to the costs of processing a case because of service issues, actual service of process, filing responses and memorandums for every single defendant named. So what if MERS was used to electronically facilitate the transfer of securitized mortgage loans. Case law on MERS is so diverse and scattered among the states and federal circuits even the U.S. Supreme Court won’t entertain looking at MERS-related cases 99.9% of the time.
Declaratory Relief Actions
This is why this author likes declaratory relief actions. While these types of actions are discretionary at the federal level, state court judges will normally entertain them. You’re asking for a determination on a question, not a final ruling. To get to the final ruling, you have to have your questions answered, enough to prove your allegations contained a factual basis, as determined by the court. This paralegal and consultant always sees better results when dec relief actions come early and go after specific targets and not just a bunch of ballyhoo on paper. Since most judges are being ordered to clear dockets, does your case really belong in foreclosure court where all the judge sees you as is a deadbeat? Or would it be better if you were in a county court of law where the judge wasn’t occupied with foreclosure as the main issue? This author has seen successes with the latter of the two modes.
Yet homeowners wait until everything is “around their ankles” before they act. The author blames this on the lack of legal education. Spokeo (since its 2016 ruling), has been wielded like a two-edged sword, mostly in favor of the lenders. In closing, this means one would have to spend serious time doing research and digging up the facts to build an actual case. Spokeo is law. Spokeo is not emotion. People would do themselves a big favor by studying the law, especially tort law. Prosser and Keeton on Torts, 5th Edition would be a great start.
The author is also nationally-syndicated talk show host on The Power Hour.
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