Led by Vincent Howard, our Perris foreclosure defense attorneys frequently hear from clients and the media about attempts to foreclose without any proof of the right to foreclose. More and more borrowers have been challenging these attempts in what some have called "show me the note" cases, because the foreclosing bank typically can't produce the note showing the right to foreclose. (That requirement is common but varies according to state law.) The trouble for the banks is that numerous loans were bundled into investments during the housing bubble, and ownership was transferred numerous times -- but lenders stopped exchanging the actual note and doing the accompanying paperwork to make the transfers legally binding. The result is cases like U.S. Bank v. Moore, an Oklahoma Supreme Court case that ultimately overturned a default judgment of foreclosure because the bank couldn't show it had the right to foreclose.
David and Barbara Moore took out their Oklahoma County mortgage in 2005, executing a note and mortgage in favor of Colonial Bank. Their paperwork gave MERS a security interest in the property, allowing it, among other things, to foreclose. The Moores defaulted in 2008, and U.S. Bank began foreclosure proceedings four months later, as trustee for a home equity trust. In its initial filing, it said it held the note and mortgage, but didn't attach copies. The Moores' answer challenged this and demanded to see the paperwork, but the bank's subsequent filings did not include the paperwork. Eleven months later, in support of a summary judgment motion, the bank did submit a note, mortgage and assignment, but the note was endorsed in blank with no date. The assignment was dated about two months after the bank started the foreclosure case, but made retroactive. The Moores never responded, so the court granted default judgment to the bank. Later, after filing for Chapter 7 bankruptcy and having the automatic stay lifted, the Moores petitioned unsuccessfully to vacate the default judgment.
This appeal followed, with the Moores arguing that the bank never proved it had standing to foreclose. Under Oklahoma law, the Supreme Court said, the bank has the burden of showing it had standing to foreclose at the time it started the foreclosure lawsuit. To show that, it must show it was the holder of the note; a non-holder in possession of the note; or someone else with the right to enforce the note. In this case, the note was indorsed in blank with no date and was not submitted until the summary judgment stage, making it unclear whether the bank had the note in its possession at the time of the foreclosure lawsuit. In order to foreclose legally, therefore, the court said the bank must show it had the right to enforce the note prior to filing its foreclosure case. Because the bank had never conclusively done this, the Oklahoma Supreme Court reversed the summary judgment ruling and remanded the case to determine whether the bank had standing. A dissent by Justices Gurich and Winchester said the blank indorsement submitted with the summary judgment motion should be sufficient.
Vincent Howard and our Irvine foreclosure defense lawyers were interested to see that the dissent cited no fewer than six previous cases on the same subject, all within the last four months. Most of them appear to have held the same way as this one -- that foreclosing entities need to be held to strict standards before they are permitted to foreclose. We agree. A foreclosure is not a small thing in the lives of the people affected; they lose their home, their investment and their plans and hopes for the future. Before a lender is permitted to foreclose, we believe that lender should be able to demonstrate that it has the right to do so -- even if that means enforcing technicalities. As the Oklahoma high court said in its decision, this is a fundamental principle of the law. The San Diego foreclosure defense attorneys at Howard Law, P.C., hold lenders to that standard when necessary, through predatory lending litigation because California doesn't use judicial foreclosures.
If you're fighting a foreclosure and you don't believe your lender or loan servicer is giving you a fair chance, you should call Vincent Howard and the predatory lending experts at Howard Law for help. You can reach us toll-free at 1-800-872-5925 or send us a message online.