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Feature Article
October 12, 2009
For more information contact:
Richard F. Kessler Documentary Clearing House LLC.941-924-5608,
 richardfkessler@verizon.net
Foreclosure Defense Strategy: Clients in Search of a New Paradigm
Documentary Clearing House and Associates (“DCH”) has pioneered a new strategyfor attorneys who defend foreclosure cases. To date, DCH has produced threemotions to assist attorneys implement the new strategy.Viewed from afar, the short, unpleasant history of foreclosure during the last threeyears presents a sorry spectacle. Far too many judges in foreclosure proceedingshave stopped behaving like judges and instead become advocates for theforeclosure mills. The parties that foreclose continue to ignore and avoid alternatedispute resolutions. The government’s efforts to stem the tide of foreclosure andencourage alternate dispute resolutions have been feckless and dissipated. Mostpeople being foreclosed have not discharged their legal obligation to defendthemselves. Instead, many if not most foreclosure cases go to summary judgmentuncontested. The resulting assault upon American homeownership has beensystemic and overwhelming.Many homeowners in foreclosure believe that legal representation is unaffordable.Unable to make monthly mortgage payments, they conclude that they have nomeans to hire a lawyer. The public sector which defends people who cannot afford alawyer has been unable to mount an effective counter- response to foreclosure. Too much time has been spent on tactics; too little time has been spent on strategy.Foreclosure defense is preoccupied with finding omissions, defects and deficiencies. The tactics tend to show that a rule has been violated. Too many courts are inclinedto forgive and forget. The courts dream up notions such as finding the non-compliance merely “technical” or that the foreclosure is within the “four corners of the loan agreement”.DCH is calling for a change in strategy. What is needed is a new strategy which iseffective and affordable. DCH’s new motion addresses both these requirements.1.Employ generic defenses to make defense against foreclosure affordable tomost of those facing foreclosure.1
 
Instead of a case specific defense custom designed to meet the unique questions of fact and law unique to each case, a defense which most clients confronted byforeclosure can ill afford, DCH is providing pleadings and discovery where one sizefits all. DCH is creating generic defenses. The foreclosure mills have declared waron defaulting mortgagors. The cost effective response to litigation filed by theforeclosure mills is counter-measures from a defense mill. DCH provides the bulletsfor attorneys to fire. By putting foreclosure one the assembly line, every client canafford to retain his or her own hired gun in a foreclosure battle.. There is a conundrum caused by the litigation protocol used in defense litigation torepresent clients in foreclosure: It is effective and counterproductive at the sametime. Lawyers are taught to approach each case as unique and upon its own merits.We are also taught to employ tactics to complicate the other side’s case anddiscover damaging information. Lawyers also try to use discovery to find errors andomissions in the other side’s case. A proficient litigator wages war upon the otherside with motions, depositions, production of documents, interrogatories andrequests for admissions and stipulations. Attorneys are taught that litigation casesare won and lost in pretrial preparation. Many believe that a successful outcome ispredicated upon pre-trial strategy. Such tactics are p[art of the litigation protocoland have over time proven themselves to be effective and productive. The problem lies neither with the tactics nor the strategy. Lawyers approach alitigation case like a tailor making a custom suit. Each case is entitled to receive itsunique defense to custom fit the facts and law applicable to the case. The problemwhen it comes to foreclosure cases is the client. A client who cannot makemortgage payment can ill afford a custom suit. One reason so many cases go touncontested adjudication is that the client has no way to pay for a custom tailoreddefense. Three of the four major areas for defense- a defective or fraudulent note,the provenance of the note and consumer protection and consumer fraud statutesand regulations- require an extensive proof of facts. No matter how meritorious thedefense, it is not serviceable if a client cannot financially afford it. Too many foreclosure defendants find themselves between a rock and a hard place. They lack the money required for a custom tailored defense; they cannot obtainlegal services pro bono publico; and there are no neighborhood services availablefor which the defendants qualify financially. Many of these defendants wind uphaving to appear pro se and lack the ability to do so. A trained attorney litigatingagainst a lay person is an unfair contest for which the lay person is ill equipped tosucceed. For every individual who can manage competently to defend againstforeclosure, there are countless scores who cannot. Compelled by foreclosure todefend themselves and unable to do so, these homeowners are buried by the judicial system without having a day in court before they lose their homes.Under these circumstances, lawyers must begin to consider a different strategy.Maybe if a client cannot afford a custom suit, it behooves counsel to take a suit off 2
 
the rack. To accommodate a wider base of foreclosure defense cases, it isnecessary to develop and implement generic strategies where one size fits all. Suchstrategies would not be dependent upon the facts, circumstances and laws uniqueto each case. Instead, such a strategy would be dependent upon facts,circumstances and laws which a large number of foreclosure cases have incommon.In this connection, DCH has concluded that the fourth area of defense,securitization, provides a uniquely fruitful field for generic defenses. Factorscommon to and endemic in all securitizations of mortgages are vulnerable to attackin cases after case where a mortgage has been securitized. A one size fits alldefense tactic which is replicable in case after case becomes exponentially morecost effective than a client specific, one time use defense. The foreclosure mills have stolen a march on the mortgage defense bar. The clientbase of the foreclosure mill is determined to foreclose at the lowest possibleexpense. Accordingly they have provided a large number of cases at a fixed rate of compensation per case. This has caused the foreclosure mills to put foreclosure onthe assembly line. The tendency to file the same pleadings in case after caseirrespective of the facts of the case has led to untold abuses of foreclosure.Nonetheless, by treating foreclosure pleadings as scalable, the foreclosure millsachieve the economies of scale. This serves to reduce the average cost per case.Defense counsel can succeed by following the example of the foreclosure mills.Instead of custom designed defense, counsel must substitute off the rack, scalabledefenses. Such a change in strategy opens up a new and different set of tactics. Todate, DCH has produced two motions attacking securitization. One argues that themortgage is unenforceable. The second argue that the mortgage note isunenforceable. Both apply to any mortgage which has been securitized. DCH hasdeveloped a third motion to use in Florida which asserts that the trust isunregistered and therefore unenforceable. All three motions are generic and are notunique to a specific case.2.Proactively anticipate and address the concern of most judges regardingunjust enrichment if the debtor prevails in a foreclosure defense.What the courts are saying is that foreclosure defenses as presented defend theindefensible. That a creditor should forfeit the loan because of a technical defect isan inequitable outcome. The debtor is not entitled to an unearned windfall which isprecisely the result for which the defense consistently argues. So long asnullification of the debt is the outcome if defendant wins, defendants will continueto lose. Defendants will not succeed in overturning foreclosures unless and untildefendants explicitly seek a remedy other than cancellation of the debt. To succeed, a defense against foreclosure cannot be a one way ticket to a freelunch for the debtor. Most judges will not render a judgment they deem to have an3
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