>Daily Development for Friday, July 18,
2008=20
>by: Patrick A. Randolph, Jr.
>UMKC School of Law
>Of Counsel:=20
Husch Blackwell Sanders
>Kansas
City,=20
Missouri
>
>MORTGAGES;
FORECLOSURE;=20
PARTIES: Mortgagee, or legal assignee, is party plaintiff to mortgage=20
foreclosure action in Illinois, and servicer cannot foreclose in its own
name.
Bayview Loan Servicing v. Nelson, 2008 Westlaw 2440621 (May=20 21, 2008)
>This case mirrors trial court decisions from around the=20 country that are part of the ongoing battle between foreclosing securitized=20 lenders and defaulted home mortgagors. Obviously a rising tide of=20 foreclosure specialist lawyers are finding adequate support to raise defenses in=20 these cases.
>
>The
court treats=20
as an obvious and irrefutable reality that Illinois law requires the
mortgagee=20
to be a party plaintiff in a foreclosure action. The lender here=20
demonstrated that the mortgage had been assigned from the original
mortgagee to=20
a Limited Partnership named Bayview Financial Trading
Group.. But=20
the plaintiff, although sharing the name Bayview, was a different legal
entity,=20
serving as servicer to the Partnership. Not good enough, said the
court,=20
reversing summary judgment entered in favor of the lender.
Remanded,=20
but it=E2=80=99s clear the mortgagee will have to show up in
court.
>
>Also
see=20
DLF Mortgage Capital, Inc. v.
Parsons, 2008=20
Westlaw 697400 (Ohio App. 3/13/08) (unpublished) (summary judgment
for=20
lender inappropriate where there is nothing in the record except an
affidavit=20
from lender=E2=80=99s officer that it owns the note.
Mortgagee=E2=80=99s production of a=20
recorded assignment attached to the appellate brief, where the recording
occurred subsequent to the summary judgment, is insufficient to justify=20
affirmation. Remanded.)
>Comment1: The court doesn=E2=80=99t describe=20 the details of the servicing agreement, concluding only that it didn=E2=80=99t meet the=20 standard. Should it? Should the mortgagee be able to sue through a=20 surrogate? On the other hand, why can=E2=80=99t the mortgagee be a party? =20 Are there =E2=80=9Cdoing business=E2=80=9D problems? What else. Note that in the=20 Ohio case there was an assignment to the servicer in the end, but too late to=20 get past a reversal. Presumably, if there are no statute of limitations=20 problems, the mortgagee now will proceed below to prove its ownership. =20
>
>Comment 2: Note=20
that neither the Illinois or Ohio decisions in fact required that
assignments be=20
recorded. But there must be some evidence of assignment,
apparently,=20
beyond the naked affidavit of a mortgagee officer, to support summary
judgment,=20
at least when the mortgagor is contesting ownership. Would this be
the=20
same where the mortgagor doesn't appear? The editor guesses that
the=20
answer is no, but he's not sure, given the new judicial attention to
these=20
issues.
>
>Comment 3: This=20
problem isn=E2=80=99t going away, so the mortgage industry is going to
have to develop a=20
method of proving ownership in the name of the foreclosure plaintiffs in
judicial foreclosure states.
>
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