Facts: A homeowner executes a promissory note secured by a trust deed on their home. The trust deed permits the lender to assign the note to third parties and substitute the trustee without notice. The lender goes into bankruptcy and the trust deed is assigned to a new lender by means of a pooling and servicing agreement for a mortgage-backed security. The new lender then substitutes the trustee. The homeowner defaults on the note, and fails to cure the default. The new trustee nonjudicially forecloses on the property.
Claim: The homeowner seeks to set aside the foreclosure and quiet title to the property, claiming the assignment of the note and trust deed was completed improperly and, thus, the new trustee did not have the authority to foreclose.
Counter claim: The new lender claims the foreclosure is valid since the details of the assignment were immaterial to the homeowner’s obligations under the note and the homeowner’s failure to cure the default left the homeowner without standing to contest the foreclosure or clear title via a quiet title action.
Holding: A California court of appeals upheld the foreclosure and barred the homeowner from clearing title to the property since the details of the assignment were immaterial to the homeowner’s obligations under the note and the homeowner’s failure to cure the default left the homeowner without standing to contest the foreclosure or clear title via a quiet title action. [Yvanova v. New Century Mortgage Corporation (April 25, 2014)_CA4th_]
Editor’s note — The California Supreme Court has recently taken up this case and will conduct a new analysis of a borrower’s standing to challenge a lender’s assignment of their trust deed under a pooling and servicing agreement after the successor lender foreclosures on the defaulting borrower’s property. [See the September 2014 first tuesday Supreme Court Watch]
I don’t understand. Was the assignment recorded in the county where the property was located? “Back in the day,” judges would regularly throw out private money lenders’ foreclosures if they had not recorded the assignment of trust deed.
Does this method circumvent the mandated recording procedures for recording deeds of trust?
Dear Steven,
Thank you for your inquiry. Whether or not the assignment was recorded is not an issue commented on in this case. Here, the trust deed was assigned to a new, successor lender by means of a pooling and servicing agreement for a mortgage-backed security. The details of the assignment itself were immaterial to the homeowner’s obligations under the note. As a third-party to the securitization, the homeowner thus had no standing to call into question the pooling and servicing agreement and set aside the foreclosure.
Best,
first tuesday Editorial Staff
The homeowner is a slave who is supposed to work every day. If the work is done for the wrong slaveowner, that is not the slave’s business. If the work is not done and the wrong slaveowner flogs the slave, that is also none of the slave’s business.