Jack I'm not following. If you were "served" then you are a defendant and it is YOUR job to deny things. If they are denying something then you have accused them of something, and as defendant its not your job to prove anything.
Things being so vague I can only say that you should deny everything. Deny they hold the note. Deny that its in default. Deny that they have any rights of sale under the mortgage.
Then go read these links, and every single link therein, maybe it will spark some ideas for you. And I echo the advice to talk to a lawyer pronto.
W.A.R. Importance of Timely ANSWERING of a Complaint or Petition in Foreclosure: http://ssgoldstar.websitetoolbox.com/post/On-the-Importance-of-Timely-ANSWERING-of-a-Complaint-or-Petition-in-Foreclosure-2368565
W.A.R. Personal Knowledge, Hearsay, Conclusions, Best Evidence Rule: http://ssgoldstar.websitetoolbox.com/post/Personal-Knowledge-Hearsay-Conclusory-Averments-and-the-Best-Evidence-Rule-4903945
W.A.R. Conditions Precedent: http://ssgoldstar.websitetoolbox.com/post/The-Conditions-Precedent-Affirmative-Defense-5059262
W.A.R. Assignment of the Mortgage without the note is a NULLITY: http://ssgoldstar.websitetoolbox.com/post/Assignment-of-the-Mortgage-Without-the-Note-Is-a-NULLITY-5314462
W.A.R. The Folly of Attacking Rather Than Embracing the Assignment Forgery: Harvey v. Deutsche Bank National Trust Company:
W.A.R. Defensive Discovery: Starting Off On the Right Foot!: http://ssgoldstar.websitetoolbox.com/post/Defensive-Discovery-Starting-Off-On-the-Right-Foot!-4893757
W.A.R. On the Ancient Origins of Blank Indorsement: http://ssgoldstar.websitetoolbox.com/post/On-the-Ancient-Origins-of-Blank-Indorsement-5026533
W.A.R. Allonge Defined: http://ssgoldstar.websitetoolbox.com/post/Allonge-Defined-5080041
W.A.R. Some Online Legal Resources for Those on a Tight Budget (or Not): http://ssgoldstar.websitetoolbox.com/post/Some-Online-Legal-Resources-for-Those-on-a-Tight-Budget-(or-Not)-2060046
W.A.R. Appellee Confession of Error: Sometimes the Borrower Can Win By Appealing and then Just Showing Up!: http://ssgoldstar.websitetoolbox.com/post/Appellee-Confession-of-Error-Sometimes-the-Borrower-Can-Win-By-Appealing-and-then-Just-Showing-5291493
TEN IMPORTANT CASES:
Read FDIC v Houde and cites. http://scholar.google.com/scholar_case?case=3524357345915220078
Read Kang and cites.
Read Veal and cites.
Read Bain and cites.
Read Drouin and cites.
Read Ibanez and cites.
Read Agard and cites.
Read how parts of Agard got overturned.
Read Adams (the $20 Million dollar staples).