"Show me the note" lawsuits, which have become common after the foreclosure crisis, ask the bank to prove that it has the right to foreclose. This has become an issue because of the practice of buying and selling loans as investments, and bundling them into investments, also known as securitizing them. Vincent Howard and our San Bernardino County foreclosure defense lawyers have read numerous such lawsuits in the past few years, but many do not succeed because the court hearing them believes state law doesn't require the note. That was the case in Zadrozny v. Bank of New York Mellon, a Ninth U.S. Circuit Court of Appeals decision affirming dismissal of an Arizona couple's lawsuit. Edward and Kymberly Zadrozny raised a variety of claims under Arizona law, but all of them were ultimately dismissed by the district court, and dismissal was affirmed.
The Zadroznys bought their Arizona home in 2005, after which it was assigned at least once. They received a notice of foreclosure in January of 2010 and filed this case two months later, alleging that MERS did not have authority to act as nominee for their original lender; the lender, successor and loan servicer didn't have authority to foreclose; and an Arizona state law is unconstitutional. The defendants moved the case to federal court and then moved to dismiss. The district court ultimately granted that motion, finding that lenders are not required to produce the note before foreclosure, as the Zadroznys argued; the note was not improperly securitized and thus unenforceable; the statute of limitations bars their misrepresentation and fraudulent concealment claims; and they may not amend their complaint.
The Ninth Circuit upheld this in a lengthy decision. The Zardoznys first argued that BNYM lacked standing to foreclose because the note and deed of trust were never properly assigned to the bank. But the Ninth ruled that their deed of trust expressly permit sale and appointment of a successor trustee without prior notice to them, and thus their claims are foreclosed. It distinguished a case from the Ninth Circuit's Bankruptcy Appellate Panel as not on point, and dismissed a new argument as waived on appeal. The court next dismissed a claim that BNYM lacked authority to appoint a successor trustee because it was never a beneficiary under their loan. BNYM was assigned the loan by MERS, which had authority to do so under the deed of trust. Arizona law recognizes a successor trustee's authority, the court said, without requiring a demonstration that the successor possesses the note. The Ninth further ruled that the Arizona law they challenged is not unconstitutional; they made only bare, unsupported assertions. Finally, the Ninth denied fraud and misrepresentation claims on appeal as barred by the statute of limitations as well as waived.
Vincent Howard and our Costa Mesa foreclosure defense attorneys sympathize with homeowners who are doing whatever they can to avoid a foreclosure they feel pushed into. As the Ninth Circuit noted, Arizona courts have rejected "show me the note" arguments, so there's no relief there for homeowners. That doesn't mean that homeowners can't get relief from foreclosure through the courts, however. At Howard Law, P.C., we have brought challenges to foreclosures by invoking California and federal predatory lending laws; challenging unethical behavior by lenders during a loan modification application; and pointing out cases of noncompliance with the law. If you believe you're the victim of this kind of unethical behavior during the foreclosure of a California home, you should call our Rubidoux foreclosure defense lawyers today.
From main offices in Orange County, Howard Law represents clients across California who are struggling to hold on to their homes. If you'd like to talk to us about your case, call us today at 1-800-872-5925 or send us an email.