Homeowners, and junior lien holders, cannot rely on technical defects in the statutory foreclosure process to redress perceived wrongs, unless they can show prejudice. Two recent cases, Herrera v. First National Mortgage Assn. and Debrunner v. Deutsche Bank Nat. Trust Co., make the point clearly.
In Debrunner, Debrunner was a private investor who extended credit to borrowers evidenced by note secured by a second deed of trust. The borrowers had previously obtained a loan secured by a first DOT from Quick Loans. Quick Loans then assigned the note and DOT to Option One. Option One then assigned the note and DOT to FV-1, which later assigned them to Deutsche Bank. Deutsche Bank appointed Saxon to service the loan.
When the borrowers defaulted, Deutsche Bank recorded a notice of default naming itself beneficiary of the DOT, but only providing contact information for Saxon. Debrunner filed suit to stop the foreclosure and quiet title, claiming Deutsche Bank had no right to foreclose because Deutsche Bank admitted it did not physically possess the original promissory note, and because the NOD failed to provide correct contact information for Deutsche Bank.
The Court rejected both arguments. The first argument was rejected because “nothing in the applicable statutes . . . precludes foreclosure when the foreclosing party does not possess the original promissory note.” The second argument, that the NOD was defective because it did not provide contact information for Deutsche Bank, likewise lacked merit because Debrunner could not show resulting prejudice.
In Herrera, Herrera sought to set-aside the foreclosure sale of his home. He alleged a defect in MERS’s assignment of a DOT to OneWest. He argued that MERS lacked authority to assign the DOT because the FDIC and IndyMac Federal, the successors and assigns of the original lender, did not have an agency agreement with MERS.
Finding no showing of prejudice, even assuming the alleged procedural defects in the assignment of the note and DOT from MERS to OneWest, the court affirmed the judgment of dismissal. Even if MERS lacked authority to transfer the note, Herrera was not prejudiced. If MERS lacked authority to assign the DOT and note to OneWest and, in turn, OneWest lacked authority to assign the DOT and note, the true victim was not Herrera, but the lender.
I consult with clients and accept cases involving foreclosure and allegations of wrongful foreclosure. For other types of cases I accept, please scroll my “Home” and “My Practice” pages. If you are seeking a legal consultation or representation, please give me a call at 818.971.9409. – Michael Daymude