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First Circuit Voids Foreclosure Because of Backdated Assignment to Lender - Juarez v. Select Portfolio Servicing

February 22, 2013

Vincent Howard and our Riverside foreclosure defense lawyers were pleased to see a federal appeals court ruling permitting a homeowner to sue for wrongful foreclosure by a lender that did not own her loan. Juarez v. Select Portfolio Servicing et al. pitted Massachusetts attorney Melissa Juarez, representing herself, against several financial companies who she said had no legal authority to foreclose her home in 2008. Juarez does not dispute that she was behind on her mortgage payments, but says her loan ended up bundled and sold as an investment, in a kind of trust that required all assets to be legally transferred in by a certain date. She argued that her loan ended up in the trust not only after that date but after her foreclosure sale, making the assignment void. The district court dismissed her case, but the First Circuit reversed, finding merit in her suit.

Juarez's complaint said the trust her loan went into had to stop receiving assets on Jan. 1, 2006, but the assignment of her loan to trustee U.S. Bank came on Oct. 16, 2008, although it was backdated to July of 2007. She also alleged that nobody entered her home, as required for a Massachusetts foreclosure by entry, on the date indicated. She alleged fraud, unfair or deceptive practices and two violations of state foreclosure laws, and asked for the home to be returned to her and for monetary damages. The defendants, a group of financial companies related to the trust, removed the case to federal court and moved to dismiss. Juarez responded with a request to amend to add more claims about willful deception. The district court ultimately found that Juarez did not state a valid claim for various reasons, including standing and the validity of the assignment, and denied leave to amend.

The First Circuit started its analysis by noting that while Juarez's pro so complaint was "by no means a model of clarity," it stated a plausible claim. Without addressing the question of whether the loan was assigned to U.S. Bank before the 2006 deadline, and her standing to make that argument, it found that she'd adequately alleged that no proper assignment took place before her foreclosure in the summer of 2008. The recorded assignment was dated and notarized on October 16, 2008, she said, but dated June 13, 2007. The First Circuit read this as an argument that the assignment took place after the foreclosure, meaning it was not a confirmatory assignment. It disagreed with the district court that the confirmatory nature of the document was clear from its face, saying the document never uses the word "confirmatory." It also reversed the district court's denial of leave to amend, saying the totality of the circumstances requires this. Upholding the other dismissals, the appeals court reversed these and remanded the case.

This case is a good lesson in why it's always best to have an Orange County foreclosure defense attorney. The First mentions near the end of this opinion that this is not a garden-variety pro se case with multiple amended complaints that go nowhere, which we think is a good insight into what courts think of pro se litigants. Even an attorney, as Melissa Juarez apparently is, can get out of her depth if she's outside of her practice area or dealing with an issue that makes her really emotional. And courts often just don't respect people who represent themselves, because they have seen too many people who they believe are wasting everyone's time. Vincent Howard and our Upland foreclosure defense lawyers take pride in doing a professional job that gets our clients' cases taken seriously.

If you believe you're a victim of predatory lending or unfair foreclosure practices, don't wait to call Vincent Howard and the legal team at Howard Law, P.C. For a consultation or to learn more, send us a message online or call 1-800-872-5925 today.

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