Vincent Howard and our Riverside County foreclosure defense attorneys were interested to see a case in which a couple representing themselves fought foreclosure all the way to the Tenth U.S. Circuit Court of Appeals, and won. In Miller v. Deutsche Bank National Trust Co., Mark and Jamileh Miller were appealing from a bankruptcy court order granting relief from the automatic stay to the bank seeking to foreclose on their home. They contended that Deutsche Bank, the foreclosing entity, had not produced and could not produce a copy of the note on their home. Like many others facing foreclosure, the Millers had had their loan sold and securitized via MERS, which made the chain of ownership murky. The bankruptcy court in Colorado and the Tenth Circuit's Bankruptcy Appellate Panel both upheld relief from the stay, but the Tenth Circuit itself reversed.
The Millers bought their home from IndyMac Bank (now OneWest and defunct for a time) in 2006. Their deed of trust named MERS as the beneficiary to IndyMac, and provided that the deed and note could be sold more than once without notice to the Millers. After they fell behind on their payments, Deutsche Bank filed foreclosure proceedings in state court, which the Millers defended by arguing that Colorado law required Deutsche Bank to show an interest recorded in the public record. The state court disagreed, and eventually the Millers filed for Chapter 13 bankruptcy. Deutsche Bank moved for relief from the automatic stay, citing a copy of the note endorsed in blank. The Millers objected, saying Deutsche Bank had no standing because it had not proved it possessed the original note. In a hearing, counsel for the bank assured the court that the original was being sent, which the court found sufficient to grant relief from the stay. The Millers appealed to the BAP, which upheld, finding that they were attempting to relitigate the state court decision improperly. The Millers appealed to the Tenth Circuit.
That court was more favorable to the Millers, finding that Deutsche Bank had not proven its case. It first found that the lower courts were wrong to rule on the basis of whether the Millers were trying to relitigate settled state-court issues. The state-court finding on standing was not a final judgment, it noted, and Deutsche Bank is the party making the request for action (relief from stay) in federal court. Issue preclusion may still apply, the Tenth said, but Colorado law does not preclude issues decided on the motion at issue in this case. Thus, the bankruptcy court was free to reconsider Deutsche Bank's standing. The Tenth then went on to consider that very issue, and found that the bank had not proven its case. A note endorsed in blank is payable to its bearer in Colorado, the court said -- but Deutsche Bank must prove possession of the original note. At no time during the court cases had it done that, the Tenth said; proof it had been assigned is not enough. Thus, it reversed and remanded for further proceedings.
These "show me the note" cases are commonly seen by Vincent Howard and our Costa Mesa foreclosure defense lawyers. Whether they succeed depends partly on state law and partly, as this case shows, on the willingness of the court to actually investigate whether the note exists and is valid. Some cases challenging standing to foreclose end quickly, but they've also been known to lead to cancellation of the foreclosure or long delays while the foreclosing bank is required to prove its standing. The Ninth Circuit's BAP has required a clear chain of ownership in at least one case, and more are likely to trickle up. At Howard Law, P.C., our Lakewood foreclosure defense attorneys look forward to more rulings requiring this -- which is nothing but a basic right for people facing the loss of their home.
From Costa Mesa, Vincent Howard and our team at Howard Law represent clients across California who are facing foreclosures they believe violate their rights. To learn more about us and tell us your story, send us a message through our website or call 1-800-872-5925.