Brown v. Deutsche Bank National Trust Company
Facts: A homeowner obtains a mortgage secured by a trust deed. The mortgage is placed into a corporate subsidiary of the mortgage holder. When the mortgage holder fails in the 2008 financial crisis, all assets of the mortgage holder, including the homeowner’s mortgage, are sold to a successor mortgage holder via a Purchase and Assumption (P&A) Agreement. The homeowner goes into default and the original trustee records a Notice of Default (NOD). The successor mortgage holder assigns the trust deed to a second successor mortgage holder and the original trustee records a Notice of Trustee’s Sale (NOTS).
Claim: The homeowner seeks to preempt the foreclosure sale, claiming the assignment of the trust deed to the second successor mortgage holder is void since the P&A Agreement did not specifically name the corporate subsidiary holding the mortgage, and therefore the first successor mortgage holder lacked the authority to assign the mortgage and thus the trustee lacked authority to initiate foreclosure.
Counterclaim: The second successor mortgage holder claims the homeowner lacks standing to challenge either the foreclosure or the trust deed assignment since the homeowner failed to present an argument as to why the corporate subsidiary’s assets were not included in the P&A Agreement.
Holding: A California court of appeals holds the homeowner lacks standing to challenge either the validity of the trust deed assignment or the authority of the trustee to foreclose on the property since the P&A Agreement included all of the original mortgage holder’s assets in the sale and the homeowner did not make a compelling argument alleging why the P&A Agreement does not include the original mortgage holder’s corporate subsidiary. [Brown v. Deutsche Bank National Trust Company (May 9, 2016) __CA4th__]
Editor’s note — The California Supreme Court held in Yvanova v. New Century Mortgage Corporation homeowners may challenge void assignments after foreclosure has occurred. No decision has yet been made concerning a homeowner’s standing to challenge void assignments as a way to preempt the foreclosure sale of a property. The decision in Saterbak v. JPMorgan Chase Bank, where wrongful foreclosure was alleged due to a void assignment before the foreclosure sale occurred, avoided this issue as the assignment in that case was merely voidable, not void.
In this case, the court again demurs on the issue of whether a homeowner may challenge a void assignment to preempt a foreclosure sale since no credible argument is made as to why the assignment is void.