Just last week, the Massachusetts Supreme Court ruled on two very important cases regarding foreclosures that affects many people in foreclosure. This has caused quite a bit of stir among those in the foreclosure defense community. I would like to share with you some of the conclusions and implications that is a result of these rulings. Here are some of the pertinent points from the ruling:
Case points from U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of
Massachusetts:
"We have long held that a conveyance of real property, such as a
mortgage, that does not name the assignee conveys nothing and is
void,”the Supreme Judicial Court said
“the court ruled that an otherwise valid confirmatory assignment was not
sufficient to prove right to foreclose.”
The banks argued, as does the securitization industry, that the right to
a mortgage follows the sale of the promissory note it secures, and since
they held the notes, they should be deemed to have the right to the
mortgage.
The court disagreed.
“where a note has been assigned but there is no written assignment of
the mortgage underlying the note, the assignment of the note does not
carry with it the assignment of the mortgage,”
** This not only applies to Massachusetts.
“This decision affirms our belief that the onus should be on the banks
and other holders of notes to follow proper procedures before initiating
foreclosure on any Massachusetts homeowner,” state Attorney General
Martha Coakley
"there must be proof that the assignment was made by a party that itself
held the mortgage,” the court said
The court rejected the banks’ request to apply the decision only to
future foreclosures.
“All that has changed is the plaintiffs’ apparent failure to abide by
those principles and requirements” in the law “in the rush to sell
mortgage-backed securities,” .... They broke the law and in so doing
committed FRAUD.
Justice Robert J. Cordy said he was struck by “the utter carelessness
with which the plaintiff banks documented the titles to their assets.”
1) A Defective Instrument is forever defective.
A defective promissory note or deed of trust is like bad food; once it’s gone bad, you can not fix it. In other words, if it can be proven that a note has been bifurcated (ie. the note is sold to one party and the deed of trust was not assigned AT THE TIME IT WAS SOLD, then it is defective). You can not go back and fix it.
All documentations has to be proper at the time of the Notice of Default or the process is deemed improper thus violating State Civil Code governing foreclosures because a foreclosure must be done by the real party of interest.
2) Perfection of Chain of Title
Related to 1) is the fact that the chain of title for both the Deed of Trust as well as the Promissory Note must be “perfected”. This means all assignments must be properly done to both.
On the Promissory Note, the proper endorsements on the back must be signed from a party that is authorized to assign the note to another party.
On the Deed of Trust/Mortgage, once an assignment is done for the promissory note, then the appropriate assignment must be done at the County recorder’s lane record for the property. This is ALMOST NEVER DONE.
3) A Blank Assignment is not perfection
It is STANDARD BANK PRACTICE to do blank assignments.
Let me say this again.
It is STANDARD PRACTICE when a note has been securitized, they ALWAYS do a blank assignment held in a vault somewhere in the event a foreclosure happens. When they need to foreclose, they then take that note and either “reverse engineer” the appropriate assignments to suite their needs or just give the note in blank to the appropriate party to foreclose.
For example, if the note went from A to B, to ….Z. And Bank Z is now foreclosing…all they do is take the note with a blank assignment and give it to Z to foreclose.
The Supreme Court ruled that this does not follow proper UCC procedure governing a negotiable instrument.
Possession of the note is not enough.
.
So What does this have to do with me? I’m in foreclosure right now.
If you are in foreclosure, then you should get a copy of the court case and read it. Understand it. Internalize it. Own it. (this case is available to our foreclosure defense members under the Reference file)
If you are in a Judicial State (ie. your lender has to sue you), then you should bring this case to court and “Motion the Court to take mandatory Judicial Notice”, and include the case as a Memorandum of Law in the caption. (this is included in the documents for foreclosure defense members).
You should then file an objection to require that your lender provide proof of standing quoting this Supreme Court ruling. Specifically, the requirement to provide proof of perfection of chain of title for both the Mortgage and the Promissory note that proves that they had standing at the time of the Notice of Default.
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If you are in a Non-Judicial State, then you will need to file a civil action against your lender to require them to provide proof of claim; specifically that they have proper standing to foreclose. This means that they must demonstrate that they have perfection of chain of title for both the Deed of Trust and the Promissory note at the time of the issuance of the Notice of Default.
You should also notify the Trustee of this and put them on notice that they are complicit in committing fraud against you. This makes them directly liable should it be proven later that fraud has indeed been committed. Without this notice, they are immune because they were simply doing their job.
Of course, before you can sue anyone, you will need proof. The Plaintiff has the burden of proof. If you have evidence of movement (ie. the loan moved from Bank A to Bank B, to Bank C), AND there was no matching assignment at the county recorder’s office, then this is evidence. If you have evidence that the loan has been securitized, then you can submit this as proof. Remember, without proof, your case will be dismissed for “failure to state a claim”.
Obviously, the process of litigating against one’s lender is a harrowing one and should not be taken lightly. You should consult an attorney if possible. If you can’t afford an attorney and would like to do it yourself, then you should gather as much evidence of fraud as possible. This means going down to the County Records department and get a title search for your property to find all assignments.
You should study up on your State’s Civil Procedures to know the rules of your state in regards to civil litigation.
You should then learn the rules of court by getting Jurisdictionary by Dr. Frederic Gray. This is the absolute MUST READ and MUST HAVE resource if you are even considering litigation. I give it my highest recommendation.
If you need help with the process, then we invite you to join our foreclosure defense membership program.
Obviously, if you are facing a trustee sale in the next 30 days or so, you don’t have time. If this is the case, then we recommend you read our guide on how to stop a Foreclosure Trustee Sale.