July 3, 2019

Two opposing expert witnesses in the same case have both consistently testified that there are insurances and reserves to cover the risk of borrower defaults on loans placed into a securitization trust, and that the premiums for these insurances and reserves are paid for by the borrowers from a portion of their interest payments. The homeowner’s expert Richard Kahn, a 40-year veteran of the Wall Street securitization business, and Bank of America’s expert Laura Borrelli, a former member of the New Jersey Banking Commission, provided this consistent testimony in depositions.

This evidence directly contradicts the fallacious argument, made by “bank” and servicer foreclosure attorneys (and accepted by many Judges), that such resources are not available to a borrower as a source of defense or challenge to the amount claimed due under the loan the subject of a foreclosure as “the borrower is not a party to such contracts”. The sworn testimony demonstrates that it is the BORROWER WHO IS PAYING FOR THE INSURANCE AGAINST THE RISK OF HIS OWN DEFAULT. As such, a borrower should properly be permitted to assert a setoff-related defense and engage in discovery to ascertain information as to the specific insurances and reserves available to the securitization trust into which the borrower’s loan was placed, and the payments to the trust by any insurer as a result of claims arising from defaults for any tranche into which the borrower’s loan was placed. Mr. Kahn has also testified that one loan may serve as collateral for several tranches, so it is entirely possible that the default on one loan could result in multiple payments to the trust.

The problem at this point is undoing the damage caused by bankster lawyers who pervert and misrepresent the facts, just as they have done with the same false argument that “the borrower has no standing to challenge an assignment” which is based upon their selective use of only a portion of a ruling from the U.S. Court of Appeals for the 6th Circuit in the Livonia Properties case, which the same 6th Circuit later clarified in another decision by holding that the true ruling in Livonia Properties is that a borrower DOES have standing to challenge a putative assignment. Mr. Barnes has obtained a ruling from a Pennsylvania Federal Court which so holds, and which is the subject of a recent post.

Jeff Barnes, Esq,, www.ForeclosureDefenseNationwide.com