July 26, 2016
Is an untimely and/or non-conforming transfer of a California Homeowners Promissory Note and Deed of Trust to the mortgage pool of a securitized trust, in contravention of the trust governing agreements and after the trust's closing date, void or merely voidable?
WHY REVIEW SHOULD BE GRANTED
In Yvanova, 62 Cal.4th at 924, this Court held a homeowner had "standing" to challenge a void assignment of her home loan through an action for wrongful foreclosure: "We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the assignment." One of the issues the Court did not decide was what exactly constitutes a void assignment versus a voidable assignment. Ibid.
Here the court of appeal held that a late assignment was merely voidable citing Saterbak v. J.P. Morgan Chase D066636, citing Rajamin v. Deutsche Bank National Trust Co. (2d Cir. 2014) 757 F.3d 79, 88, 89 ['the weight of New York authority is contrary to plaintiffs' contention that any failure to comply with the terms of the PSAs rendered defendants' acquisition of plaintiffs' loans and mortgages void as a matter of trust law'; 'an unauthorized act by the trustee is not void but merely voidable by the beneficiary'].)" (Saterbak, at p. 815.). The Saterbak Court (4th District, Division 1) concluded a late assignment that failed to comply with the terms of the PSA would be "merely voidable," adopting a Second Circuit Court of Appeals decision (Rajamin) and rejecting the contrary holding in Glaski v. Bank of America, 218 Cal.App.4th1079 (2013), that a borrower could allege the foreclosing party lacked authority because the assignment of his deed of trust into an investment trust violated the documented rules that governed that trust.
Another judicial panel in the Court of Appeal 4th District, Division 1 in Sciarratta v. U.S. Bank Nat'l Assn. D069439 published 5/18/16 held that a property owner "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."
The Sciarratta court also stated "As the Supreme Court in Yvanova explained: "'A homeowner ... has standing to challenge that assignment as void because success on the merits would prove the purported assignee is not, in fact, the mortgagee and therefore lacks any right to foreclose on the mortgage.[emphasis added]" Sciarratta slip opinion at page 15, quoting Yvanova supra, 62 Cal. 4th at pp. 935-936.
One of the prime reasons for this Court to grant review is to establish "uniformity of decision". Rule 8. 500 (b) (1) of the California Rules of Court. Should the Castro opinion stand without review, two systems of laws to govern foreclosure cases shall exist.
Without guidance from this Court, homeowners will enJOY success or endure failure depending on what court they land in, or on appeal what panel of Justices are assigned to the homeowners case. Since there is no horizontal stare decisis in California, trial judges who previously rejected Glaski claims, in favor of the established authority of Jenkins v. J.P. Morgan Chase Bank, N.A., 216 Cal.App.4th 497 (2013) and its progeny, would again be able to circumvent the Glaski rule and deny homeowners their day in court.
Geography has no bearing on the precedential power of a court of appeal decision In the current situation, any trial court in California is free to pick either the Saterbak opinion or the Sciarratta opinion, as precedential authority, to sustain or overrule a demurrer in a wrongful foreclosure case involving a securitized trust. Auto Equity Sales, Inc., supra, 57 Cal. 2d at 456 ("where there is more than one appellate court decision, and such appellate decisions are in conflict," the superior court "can and must make a choice between the conflicting decisions"). Both the Saterbak and Sciarratta opinions came from the San Diego 4th District Division 1 court of appeal by two different panels of justices.
Even if homeowners have a demurrer overruled in their instant case, the case will likely be appealed by the institutional defendant, due to the diversity that exists in current case authority. For example, if you are in San Diego County your case may be reversed if you draw a panel of justices assigned to the case that agree with Saterbak, instead of Sciarratta. The lack of uniform authority that prevailed after the Glaski ruling continues.
A home loan and deed of trust are nothing more than contracts. As contracts, they must be enforced to uphold their clear language. California allows non-judicial foreclosures, but only if a contract gives a party the power to sell the home. The standard deed of trust grants that power only to the beneficiary under the deed of trust. (Some deeds of trust, like the deed of trust in this case, use the term "lender" in place of "beneficiary".) The deed of trust allows it to be assigned, so that the party receiving the assignment can claim to be the beneficiary. Under California case law going back at least 60 years, the purported assignee has the burden of proving he owns the loan through a proper assignment. Cockerell v. Title Ins. & Trust Co., 42 Cal.2d 284, 290 (1954). Also, it undermines the public policy set by the Homeowners Bill of Rights, which clearly allows a pre-foreclosure attack against a void assignment. Finally, the foreclosure statues now make clear that they do not limit a borrower's remedies. See Civil Code section 2924.12 (h).
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Nancy Duffy McCarron, CBN 164780
Attorney, Real Estate Broker, BBB Arbitrator, CA Notary Public
Certified Forensic Loan Auditor, Property Manager
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