Evidence

Credit card statements

hearsay

need personal testimony of custodian of records 803(6)

self-authentication of regularly conducted activity 902(11) - obviate need for live witness
records of automated process - lacks human
admit as certified in writing by custodian or other qualified person

"Loan Servicers Failing" Per Center for Responsible Lending

The Center for Responsible Lending issued a press release on August 4, 2009 asserting that only 15

Senator Durbin Gives Banks Mortgage Cramdown "Ultimatum"

The media reports that Senator Durbin has "put the banks and mortgage servicers on notice" that Congress will renew efforts in three months for bankruptcy reform to allow residential mortgage cramdown unless the banks become aggressive in modifying mortgages to prevent foreclosure. It is reported that Senator Durbin want to see 500,000 mortgage modifications by November. Recently House Financial Services Committee Chairman Barney Frank made a similar threat.

This is amid recent revelations that the Administration's foreclosure mitigation efforts, of which the $75 billion Home Affordable Mortgage Program ("HAMP") is the centerpiece, have failed to slow the foreclosure crisis and stabilize the nation's housing market. The Administration initially estimated that HAMP would prevent 3 to 4 million foreclosures, but yet only about 200,000 modifications have been accepted and most of these are merely three month trial period agreements. This amounts to only 9% of delinquent borrowers.

The Treasury Department reports that approximately 85% of mortgages are covered by HAMP participating servicers, that 38 servicers have signed servicer participation agreement to modify loans under HAMP and that approximately 2,300 others automatically participate in HAMP as they service loans owned or guaranteed by Fannie Mae or Freddie Mac.

The banking industry reportedly spent $42 million on lobbyists to defeat bankruptcy reform efforts earlier this year when it failed to pass the Senate by 15 votes.

It is reported that mortgage companies are reluctant to modify mortgages as they collective lucrative fees on mortgages in default.

Hearing Set for HAMP Constitutional Claim for Preliminary Injunction

A hearing on the motion for a preliminary injunction in the case of Nichole Williams et al. vs. Timothy F. Geithner, et al., case 09-CV 1959 (DC Minn.) has been set for September 28, 2009 in the Federal District Court of Minnesota. The Plaintiffs seek the injunction of all foreclosures by the involved defendants in the State of Minnesota until the HAMP program is procedurally sound. The lawsuit alleges the the homeowners' Constitutional right to procedural due process was violated, including by way of lack of notice of the basis of the decision and lack of an opportunity to appeal. The HAMP application of one of the plaintiffs was denied and he was not give any reason or an opportunity to appeal. The HAMP application of another plaintiff was ignored.

The memorandum of law in support of the motion for a preliminary injunction detailed the background of HAMP. The Emergency Economic Stabilization Act of 2008 (the "Act") was signed on October 3, 2008. 12 U.S.C. Section 5201. The Act allocated $700 billion to the Treasury Department and granted the Treasury Secretary the authority to establish the Troubled Asset Relief Program or "TARP." 12 U.S.C. Sections 5211, 5225. Section 109 of the Act provides for the Treasury Secretary to implement a plan to "maximize assistance for homeowners." 12 U.S.C. Section 5219(a). The Act also requires the Treasury Secretary to consent to any loan modification offer. Section 110 requires the Federal Housing Finance Agency, as conservator of Fannie Mae and Freddie Mae, to create and implement a plan to prevent foreclosures.

Pursuant to this authority, the Department of Treasury, the Federal Housing Finance Agency, Fannie Mae and Freddie Mac created and announced the Making Home Affordable Program, which consists of two sub-programs, on February 18, 2009. The first provides for certain mortgage refinancing and was called Home Affordable Refinance Program or HARP. The second provides for the implementation of a uniform loan modification protocol and was call Home Affordable Modification Program or HAMP. Approximately 3 to 4 million homeowners are potentially eligible for HAMP and the Treasury Department allocated $75 billion of TARP and non-TARP funds to fund HARP and HAMP. Beginning with March 4, 2009, a series of directives as to HAMP were issued to mortgage servicers.

The memorandum argues that as HAMP is being presently implemented, there are no requirements that homeowners be told the specific reasons for the denial of a HAMP modification and there is no uniform procedure to provide for the ability to appeal. The Plaintiffs argue that approximately 40-60% of the foreclosures conducted in Minnesota are by mortgage servicers bound by HAMP requirements. It is also points out that the General Accountability Office (the "GAO") just last week confirmed that procedural safeguards were not yet in place to protect homeowners.

Plaintiffs seek a preliminary injunction to preserve the status quo. They note the similarity to cases related to the government's loss mitigation and foreclosure prevention programs during the farm foreclosure crisis in the early 1980's. In these cases, the courts issued preliminary injunction of foreclosure proceedings until the government promulgated proper procedures making its foreclosure prevention program constitutionally sound. In the case of Allison v. Block 723 F.2d 631 (8th Cir. 1983), the Court ruled that "[n]otice to the borrower is therefore indispensable...the Secretary is required to give notice to defaulting CFRDA borrowers and to create a procedure for asserting section 1981a claims." The Allison Court also held that [a]gainst this backdrop of statutory language and legislative history, we cannot accept the Secretary's assertion that Congress left the implementation of section 1981a a matter of unfettered administrative discretion." The Court enjoined the farm foreclosure until "the intent of Congress becomes the action of the Secretary."

The Plaintiff also cited the case of Johnson v. U.S. Dep't of Agric., 734 F.2d 774 (11th Cir. 1984) where the 11th Circuit Court of Appeals held that the District Court abused its discretion by denying a motion for preliminary injunction in view of the fact that there was a substantial likelihood that the mortgagors would prevail, at least in part, on due process and equal protection claims. The Court found that the farm loans involved a statutory entitlement and a property interest protected by the due process clause of the Fifth Amendment and that, at a minimum, due process assures notice and a meaningful opportunity to be heard before a right or interest is forfeited.

The memorandum argues that HAMP is a government program authorized by Congress and jointly created by the Department of Treasury, Fannie Mae, and Freddie Mac. 12 U.S.C. Section 5201. The memorandum further argues that there is government action by the Department of Treasury and the Federal Housing Finance Agency (as conservator for Fannie Mae and Freddie Mac), the program creates an entitlement, and that the administration of Sections 109 and 110 of the Act are at issue. In short, the plaintiffs argue that the case involves government actors implementing a federal law with federal funds, that is not an issue of private actors making private decisions and that it satisfies the "government action" requirement for bringing a constitutional claim.

In summary, the memorandum argues that the Plaintiffs are entitled to due process in the administration of HAMP - a $50 to $75 billion federal entitlement program. The Fifth Amendment of the Constitution requires "due process of Law" before any person can be "deprived of life, liberty, or property" and the concept of property includes statutory entitlements derived from an independent source as well as government-fostered expectations. "Once a property interest in a statutory entitlement is identified, a person is entitled to notice, an opportunity to be heard, and reasonably accurate process for determining eligibility." The Plaintiffs also argued that the lack of the right to appeal to a neutral party is also a violation of their procedural due process rights.