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Oklahoma Supreme Court Remands Mortgage Case to Determine Notes True Owner - JP Morgan Chase v. Eldridge

March 14, 2012

Vincent Howard and our San Bernardino foreclosure defense lawyers were interested to see another homeowner victory in a "show me the note" case. In JP Morgan Chase, N.A. v. Eldridge, David and Mary Eldridge argued that the entity seeking to foreclose on them, Chase Home Finance Milwaukee, was not the true owner of the note and mortgage and thus had no standing to foreclose. After the Eldridges had filed for bankruptcy, CHFM sought to foreclose in Oklahoma state court, where the trial court eventually found CHFM had been correctly assigned the note by Chase. However, the Oklahoma Supreme Court found no evidence to support the contention that CHFM was the true owner of the note when it commence the foreclosure, and ultimately remanded the case.

The Eldridges took out their mortgage in 2007, signing a mortgage and note that made Chase the lender and payee. They filed for bankruptcy in 2009 and agreed to reaffirm the balance on the note, but went into default on their loan. In 2010, CHFM started foreclosure proceedings. In its motion for summary judgment, filed five months after the foreclosure, it said it had been assigned the note by Chase. David Eldridge, an attorney who represented himself during the foreclosure, raised several other defenses, including noncompliance with HAMP, before arguing that CHFM had no standing to foreclose. CHFM had not been assigned the note or mortgage until more than six weeks after it filed the foreclosure case, and could not produce the original note at first. However, the trial court ultimately granted summary judgment to CHFM, finding it was the undisputed owner of both documents. The Eldridges appealed.

The Oklahoma Supreme Court reversed. To foreclose in Oklahoma, a plaintiff must show ownership of and right to enforce the note. Ownership of the mortgage alone is not enough, because the mortgage follows the note in Oklahoma and they cannot be separated. In this case, CHFM has an unendorsed note and an assignment of the mortgage. The mortgage assignment is irrelevant, the Supreme Court wrote, and the unendorsed note makes it legally impossible for CHFM to be the legal owner of the note. It may still foreclose if it can show it has the rights of a holder, but to do that, it must show a voluntary transfer of the note from the previous owner and the purpose of the transfer. In this case, the record shows that the mortgage was assigned nearly five months after the foreclosure was filed, and this shows only the purpose of the assignment of the note, not when or whether it happened. Because this is a question of fact, the high court found it was inappropriate for summary judgment and remanded the case with instructions to work out ownership as of the foreclosure date.

Vincent Howard and our Anaheim foreclosure defense attorneys are always pleased to see a homeowner victory in these "show me the note" cases. As the Oklahoma Supreme Court notes, it's a fundamental part of the law to expect foreclosing entities to demonstrate ownership of the rights they seek to use when they foreclose. After all, the defendant's property rights (and home equity) are at stake. Not all courts have decided these standing cases in the same way -- especially because foreclosure requirements vary so much from state to state. However, the Los Angeles County foreclosure defense lawyers at Howard Law, P.C., have seen a promising trend toward stricter requirements for foreclosing entities. This has been particularly true since the robo-signing scandal became known, giving judges a good reason to be wary.

If you're facing foreclosure or know you wll be, and you'd like to talk to an experienced attorney like Vincent Howard about your options, don't wait to call us. You can reach us toll-free at 1-800-872-5925 or send us a message online.

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