February 18, 2016
This morning, the Supreme Court of California issued its very detailed and extremely well articulated 30-page decision in the matter of Yvanova v. New Century Mortgage, Supreme Court case number S18973, which approved Glaski (which permits borrowers to challenge void assignments) and disapproved the Jenkins/Gomes line of cases, which had not permitted borrowers to ever challenge assignments under any circumstances on the “not a party to the assignment” theory. The decision was unanimous, meaning that all seven Justices of the Court agreed with the result with no dissent.
The Court stated that Jenkins painted the brush “too broadly”, and failed (like several unreported Federal court decisions) to recognize the legal distinction between a challenge to a void assignment and one which was merely voidable. On that issue, the Court defined a “voidable” type challenge as one where the borrower was attempting to enforce the terms of the instrument of assignment, which is distinctly different than taking the position that the assignment could not have occurred and was thus void and transferred no interest (the former not being permissible while the latter is).
The opinion held that only the entity holding the beneficial interest under the DOT (which is either the original lender or the assignee or agent thereof) may instruct the trustee to commence and complete a nonjudicial foreclosure, and that by not permitting homeowners to challenge a void assignment that they would be deprived of the means to assert their legal protections and are thus permitted to challenge the foreclosing entity’s status as the “mortgagee”. The opinion relied heavily upon the Culhane decision from the U.S. Court of Appeals for the 1st Circuit (which has jurisdiction over appeals of Federal cases in the Northeastern US), which also permits borrower challenges to assignments. The task is now to get the rest of the courts in the US to understand and adopt the proper position which has been taken by appeals courts on both coasts, and to prove that MERS cannot be the agent or assignee of the Note for the lender where, as here, MERS purported to act for a bankrupt entity years after that entity ceased to exist.
The opinion did not take any position on whether a post- (securitization) trust closing transfer is a void assignment (thus leaving the issue open), and did not preclude the advancement of a claim to seek to preclude a nonjudicial foreclosure before it takes place. The opinion states very clearly that its holding was narrow, and is confined to permitting a homeowner to assert a cause of action for wrongful foreclosure after the sale has taken place based on a void assignment, as that was the point that a real injury had manifested and thus the homeowner has standing to seek redress for that injury.
The Court held that the fact questions surrounding the assignment were not before the Court. The effect of this is that the Court understood that there are questions of fact surrounding whether an assignment is void, and thus the opinion should be able to be used to successfully defeat Motions for Summary Judgment on the issue of whether an assignment is void.
The anti-Glaski pundits and those who took the position that Glaski was an “outlier” decision have now been silenced (the same thing which happened in Oregon when the homeowners’ victory against MERS in the Niday case in the Oregon Court of Appeals was similarly characterized, which stopped when the Supreme Court of Oregon unanimously approved the court of appeals’ decision). The “broad brush” courts which have taken the erroneous position that a borrower may never challenge an assignment under any circumstances have now been shown how they are wrong. The bank and servicer attorneys who had relied upon Jenkins, Gomes, and the other cases which gave rise to the the per se rule of no standing of a borrower to challenge an assignment are now on notice that this is NOT the law in California.
Many people across the US have been anxiously awaiting this opinion, which one of our California network counsel provided to us this morning. A copy of the full opinion is available upon e-mail request.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com