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Why “Securitization & Chain of Title Analyses” (Audits) are Important

Securitization Audits are the Key to Stopping Foreclosure — Richard F. Kessler, Esq.

A securitization audit, properly performed, can discover the “smoking gun” that can save a home from foreclosure. Very few people have the training and expertise to identify and document the legal defects and deficiencies which serve to bar foreclosure. The widespread misuse of a securitization audit by homeowners has led to a misconception of what a securitization audit is and what it does. That is why BPIA urges every homeowner to only obtain the audit for the use of counsel who either has been retained or will be retained. However, it is understood that resources and the ability to retain competent counsel is not always possible, and that litigating a foreclosure action as a pro se litigant becomes necessary. We wish to be clear that the securitization and chain of title analysis (audit report) is not a legal tool to be used in court. William Paatalo, who conducts each investigation, is a court qualified expert witness (See: “About Us”) who can explain the findings and evidence in court as an expert.

What is a Securitization & Chain of Title Analysis

A securitization & Chain of title analysis inspects the organization and operation of a mortgage backed securities trust (“MBST”) to obtain evidence for mortgage foreclosure defense. The report will often provide critical internal loan level accounting data which is not available to the general public. The investigation report which results is a tool for an attorney or pro per litigant. It will not replace an expert witness and will not, by itself, stop a foreclosure.

Why perform a securitization audit?

More than 80% of mortgages were securitized. A mortgage is securitized when it has been sold to a mortgage backed securities trust (“MBST”). MBSTs became so popular that the volume and velocity of mortgage transfers led to errors and omissions evidence of which can be productively used by attorneys and pro per litigants engaged in foreclosure defense. The securitization produces an investigation report intended to include information and evidence to be used by an attorney or pro per litigant to defend against foreclosure.

What does a securitization & chain of title analysis provide?

A securitization & chain of title analysis uses the best efforts of a trained and qualified auditor to find evidence and documentation to support the legal arguments of counsel that:

  1. The mortgage is unenforceable;
  2. The party attempting to foreclose does not have the right to foreclose; and
  3. Undisclosed mortgage payments, wrongfully alleged to have been unpaid to trigger foreclosure, were paid by a third party to the mortgage creditor fully satisfying the installment payment obligation of the mortgage debtor to the mortgage creditor.

These are just a few of the examples.

What does a securitization & chain of title analysis not address?

The securitization & chain of title analysis does not perform:

  1. A Forensic audit for consumer defenses such as TILA, RESPA, and FDCPA. [However, with the recent U.S. Supreme Court Ruling regarding TILA Rescission, BPIA will review for issues regarding fraud and TILA that could potentially re-open the statute of limitations for a TILA Rescission.]
  2. A document authentication audit usually needed to detect “Robo-Signing.”
  3. An audit to ascertain compliance with local rules of civil procedure.
  4. An audit to obtain evidence of lender misconduct with respect to loan modifications. [note: BPIA has been seeing a new fact pattern developing with regards to loan “modifications” that are being reported to the investors when no such modification was applied for, approved of, or acknowledged by the borrower.]

How has the securitization audit been misused?

A securitization audit produces a report intended for the use by an attorney or pro per litigant to defend against mortgage foreclosure. It is part of an attorney’s work product. It provides evidence and information. By itself, it is neither admissible into evidence at trial nor discoverable by the other side. Unfortunately, securitization audits have been sold to unwary homeowners in foreclosure to serve as expert testimony without the expert. BPIA condemns such misrepresentation. Put plainly, a homeowner may not hand the audit report to the judge at a hearing and expect the judge to stop the foreclosure.

Can a securitization & chain of title analysis be used by an expert witness?

A securitization & chain of title analysis can be recast to serve as the report of an expert witness but only if the expert witness has been retained and is available for discovery and will appear at trial. By itself, the audit report cannot be introduced into court as evidence or testimony but is excludable as hearsay. When a securitization report is used as a pre-trial investigative instrument, great care must be taken not to enable the opponent to characterize the report as an expert report because that would open the doors to discovery. An attorney knows how to use the information contained in the securitization audit report and the different techniques for introducing damaging information into evidence ( such as through an expert witness, direct testimony of a witness, cross examination of an opponent’s witness and discovery, etc.).

To repeat what was said above: BPIA urges every homeowner to only obtain a securitization & chain of title analysis for the use of counsel who either has been retained or will be retained.