Why the Administrative Process Succeeds Where Traditional Discovery Fails

For years, homeowners and their counsel have filed discovery requests, subpoenas, and motions to compel in foreclosure and debt collection cases — all seeking the same elusive answer:

Who is the creditor? Show us the books. Show us the accounting trail.

And for years, the results have been the same: objections, deflections, denials. Requests are labeled overly broad or unduly burdensome. Courts, often steeped in institutional bias, dismiss these demands with the reasoning that “you took out a loan and stopped paying, and that’s the end of the story.”

But the story doesn’t end there.

This repeated futility underscores a truth that many have only recently begun to understand:

Traditional litigation tools are ineffective against a scheme that relies on concealment, phantom ownership, and off-book accounting.

What is needed instead is a process that:

• Establishes facts by default when met with silence,
• Forces the hand without relying on the court’s discretionary discovery rules,
• And attacks the accounting assumptions that underlie enforcement — not just the paperwork.

This is what the administrative process does. By issuing a formal demand under UCC § 3-501(b)(2), TILA, RESPA, FDCPA, or even § 2-609 (in commercial terms), the borrower flips the script. Rather than asking the court to compel information, the borrower demands the information directly — under penalty of law and silence. If the respondent fails to verify, fails to deny, or fails to rebut with specificity, a negative inference arises. The absence of proof becomes the proof. And this is why repeated attempts through discovery to find “the creditor” often fail — because there is no creditor. The debt was derecognized. And any re-recognition would require the impossible.

🔄 Derecognition and the Re-Recognition Dilemma

When a loan is securitized, it is derecognized under ASC 860. The originating entity (e.g., Countrywide, WaMu, Lehman, etc.) removes the loan from its books entirely. That’s the accounting reality.

But if someone later claims to re-recognize the loan — i.e., to carry it as an asset on their books — they must reconstruct the entire chain of ownership back to the original originator.

This means:

• Demonstrating lawful transfer and value consideration at every step: A ➝ B ➝ C ➝ D ➝ E ➝ F ➝ G;
• Showing each party had the right and intent to assign or convey;
• Proving no one in the chain derecognized without properly passing the baton.

That’s nearly impossible — not only because of the secretive nature of these transfers, but because most of these entities no longer exist:

• Lehman Brothers: bankrupt.
• Washington Mutual: failed and seized.
• Countrywide: absorbed, and its records fragmented or lost.

The accounting trail is not just fractured — it’s obliterated.

So how can servicers and trusts enforce? They can’t — at least not lawfully. But they do so through presumptions, fabricated assignments, and by counting on silence. That is why the administrative process is superior. It refuses to accept presumption. It demands proof. And when proof does not come — because it cannot — the administrative record establishes default. And from that default comes standing to seek further remedy: discharge, quiet title, or declaratory relief.

🔁 The Definition of Insanity

Insanity is doing the same thing over and over expecting a different result. If you’ve asked for discovery and been denied, if you’ve asked “Who owns my loan?” and heard crickets —

It’s time to stop playing by their rules. The administrative process is the key. Use it.

Let me know if you need help launching your administrative strategy — even in the final stages of litigation, or long before a foreclosure ever starts.

You have the right to ask. You have the right to know. You have the right to expose the fraud.

— William J. Paatalo Foreclosure Fraud Investigator | Securitization Analyst – bill.bpia@gmail.com