(1st Cir. Feb. 12, 2013)
U.S. First Circuit Court of Appeals Reinstates Borrower’s Wrongful Foreclosure Claim. (What Makes This Case Appealing is the Ibanez Ruling As Earlier Published on this Blog).
In a rare victory for a wrongful foreclosure claimant at the U.S. Court of Appeals for the First Circuit in Boston, the court reversed a dismissal of the borrower’s claims, ruling that a back-‐dated mortgage assignment rendered a foreclosure void.
Backdated Mortgage Assignment Proves Fatal
Melissa Juárez purchased a home in Dorchester, Massachusetts on August 5, 2005, financing it with reputed sub-‐prime lender New Century Mortgage.
The mortgage was packaged and bundled into a real estate mortgage investment conduit (“REMIC”), a special type of trust that receives favorable tax treatment, ultimately being held by U.S. Bank, as trustee.
Juárez could not afford the payments on the mortgage and defaulted.
Foreclosure proceedings began in the summer of 2008, culminating in the sale of her home at an auction in October 22,2008.
She claims, however, that lender did not hold the note and the mortgage at the time they began the foreclosure proceedings against her, and that the foreclosure was therefore illegal under Massachusetts mortgage law.
The problem in the case centered around the mortgage assignment into U.S. Bank, as trustee — the same problem the same bank faced in the landmark U.S. Bank v. Ibanez case.
The “Corporate Assignment of Mortgage,” appears to have been back-‐dated. It was dated October 16, 2008 and recorded in the corresponding registry of deeds on October 29, 2008, after the foreclosure had been completed. However, at the top of the document, it stated: “Date of Assignment: June 13, 2007,” in an obvious attempt to date it back prior to the foreclosure.
First Circuit Reinstates Borrower’s Wrongful Foreclosure Claims
After federal judge Denise Casper dismissed Juarez’s claims entirely on a motion to dismiss, the First Circuit reinstated the majority of Juarez’s claims.
U.S. Bank claimed that the back–‐dated mortgage assignment was merely a confirmatory assignment in compliance with the Ibanez ruling, but the appeals Court concluded otherwise:
Nothing in the document indicates that it is confirmatory of an assignment executed in 2007. Nowhere does the document even mention the phrase “confirmatory assignment.” Neither does it establish that it confirms a previous assignment or, for that matter, even make any reference to a previous assignment in its body.
Lacking a valid mortgage assignment in place as of the foreclosure, U.S. Bank lacked the authority to foreclose, the court ruled, following the Ibanez decision. Ms. Juarez will now get the opportunity to litigate her claims in the lower court.
Will Lenders Learn Their Lesson?
The take–‐away from this case is that courts are finally beginning to scrutinize the problematic mortgage assignments in wrongful foreclosure cases.
This ruling may also affect how title examiners and title insurance companies analyze the risk of back titles with potential back–‐dated mortgage assignments.
If a lender records a true confirmatory assignment, it must do much better than simply state an effective date.
To learn how you can use similar invalid assignment arguments to effectively challenge and reverse your wrongful foreclosure, visit http://www.fightforeclosure.net