Void Means Void - Courts are increasingly rejecting the banks' phony paperwork
/by Joe Portofino
Recent court decisions are piling up against the banks’ phony paperwork and rejecting their standing to foreclose on homeowners.
We have long advocated challenging a plaintiff’s standing to foreclose. This usually involves demonstrating to the court that the documents relied upon by the plaintiff are phony and thus void.
In order to prove this point, homeowners need to refer to the securitized trust’s Pooling and Servicing Agreement (PSA), as well as any assignments of mortgage (or deed of trust) submitted by the plaintiff in support of its foreclosure complaint.
Up until 2012, it was more often miss than hit with such a legally sound argument, but the tide has begun to turn in favor of homeowners. More and more courts are no longer buying the banks’ argument that a homeowner cannot cite violations of the PSA as a defense, or challenge the assignment of mortgage because they were not a party to it.
The California Supreme Court in its February 18, 2016 ruling in Yvanova v. New Century Mortgage Corp. et al, S218973, sent shockwaves to the banks and their foreclosure mill law firms when it concluded:
“We conclude a home loan borrower has standing to claim a nonjudicial foreclosure was wrongful because an assignment by which the foreclosing party purportedly took a beneficial interest in the deed of trust was not merely voidable but void, depriving the foreclosing party of any legitimate authority to order a trustee‘s sale.
This was followed by the California Court of Appeals May 18, 2016 decision in Sciarratta v. U.S. Bank National Association etc., et al, D069439, in which it concluded:
“Accordingly, we conclude that a homeowner who has been foreclosed on by one with no right to do so—by those facts alone—sustains prejudice or harm sufficient to constitute a cause of action for wrongful foreclosure. When a non-debtholder forecloses, a homeowner is harmed by losing her home to an entity with no legal right to take it.
Therefore under those circumstances, the void assignment is the proximate cause of actual injury and all that is required to be alleged to satisfy the element of prejudice or harm in a wrongful foreclosure cause of action.
Because most of the securitized trusts that allegedly purchased mortgage loans were formed under New York’s Estates, Powers and Trusts Law (NY EPTL), that is the controlling law for those trusts. New York EPTL’s Section 7-2.4 - Act of trustee in contravention of trust, states:
“If the trust is expressed in the instrument creating the estate of the trustee, every sale, conveyance or other act of the trustee in contravention of the trust, except as authorized by this article and by any other provision of law, is void.” (Bold, underline emphasis added.)
There is a long line of New York State Court rulings voiding ultra vires (beyond the power or authority) transfers into express trusts under EPTL Section 7-2.4. Some of them were cited by the Illinois Court of Appeals in its ruling in Bank of America National Ass’n v. Bassman FBT, L.L.C., 2012 IL App (2d) 110729, where it stated:
“If this statute controls [New York EPTL 7-2.4], the transfer of the mortgages to the trust would appear to be a nullity (we note that this statute has been in effect in New York in some form since at least 1870 (see Anderson v. Mather, 44 N.Y. 249 (N.Y.1870))). Moreover, this is the sort of defense — namely, that the transaction is void under the statute — that defendants would be permitted to raise. Livonia Property Holdings, 717 F.Supp.2d at 735. Indeed, several New York courts have applied the statute, or its predecessors, in such a manner. See, e.g., In re Application of Dana, 119 Misc.2d 815, 465 N.Y.S.2d 102, 105 (N.Y.Sup.Ct. 1982); Dye v. Lewis, 67 Misc.2d 426, 324 N.Y.S.2d 172, 175.” (Bold, underline emphasis added.)
In Deutsche Bank as Trustee v. Collins, et al, Worcester Housing Court, 1185-SP-5095 (July 18, 2013), the court upheld the Defendants’ Motion for Summary Judgment “for reasons set forth” which included:
“This assignment which the plaintiff offers as part of their prima facie proof of standing does not comply with the Pooling and Servicing agreement…. the PSA says that for loans – both the note and the mortgage – to get into the trust they would have to have been assigned to Sheffield Receivables Corporation, Sutton Funding, LLC, Securitized Assets Backed Receivables, LLC before being transferred into the trust. This assignment … goes from MERS to Deutsche Bank … as Trustee…. It only mentions New Century Mortgage Corporation. Neither MERS nor New Century Mortgage Corporation are any of the parties required to transfer a mortgage into the Trust….
“the closing date for the Trust was on or about June 14, 2007; the PSA allows only an additional 90 days beyond June 14, 2007 for any loan to have been reviewed and rejected. This assignment … happened on July 28, 2009. The trust was already closed … no evidence of the transfer of the Note. …”
Glaski v. Bank of America, No. F064556 (7/31/13)(e.s.) Cal. 5th App. Dist.) was the predecessor decision to the Yvanova ruling by the California Supreme Court and held that:
“As NY Trust law explicitly voids any transfer of assets in contravention of the Trust’s instrument, this assignment is void as a matter of law. Deutsche Bank … as Trustee … did not, therefore, own the mortgage and therefore, did not have the power to exercise the power of sale in the mortgage. The foreclosure is therefore void. Plaintiff lacks standing to bring this eviction action.”
Other recent cases reaching similar conclusions include; Saldivar v. JPMorgan Chase, 2013 WL 2452699 (Bky. S.D. Texas 6/5/13) and HSBC Bank USA, National Association, et al. v. Marra, No. 2008 CA 000630 NC (Aug. 14, 2013) which both gave weight to the clear language of New York EPTL Section 7-2.4 in voiding those foreclosures because of ultra vires acts.
The Massachusetts Court of Appeals has now added to this body of decisions with its recent ruling in U.S. Bank, N.A. as Trustee for RASC 2006KS9 v. Bolling, No. 2015-P-1259, (June 2016) by concluding that ultra vires acts by a common law unregistered trust must be considered void by definition, quoting from some of the above referenced decisions.
Summarizing, homeowners now have a growing list of court decisions upholding their right to challenge the banks’ phony paperwork including phony assignments, and violations of the PSA.
One way to prove the bank’s lack of standing to foreclose is to find the Closing Date for the securitized trust and compare it to the date of the purported assignment. 99.9% of the time, the assignment will be after the closing date of the trust, often years later.
Thus the Trust could not possibly have accepted such a loan transfer which makes the assignment void. This information, combined with citing the above referenced cases, should help insure your adversary does not steal your home.
