The July 31, 2013 the CA appellate court ruling in GLASKI v. BANK of AMERICA allows SELLER’s and their agents to challenge non-judicial foreclosure where ROBO-SIGNING has been used to transfer a loan to a Mortgage-Backed Security Trust by an ASSIGNMENT of DEED of TRUST. This ruling provides SELLERS a new legal tool with which to leverage to CLOSE of ESCROW on difficult SHORT SALES.
To avoid compliance with the OCC Consent Orders and National Mortgage Settlement, CHASE, Bank of America and others have transferred servicing of loans to OCWEN and NATIONSTAR who are denying SHORT SALES. As a California licensed Real Estate Professional in good standing or homeowner in distress you are entitled to a FREE CONSULTATION with the FIRM to discuss the implications of “GLASKI” and other LAW as a means to close any deal. The key to closing more SHORT SALES or obtaining a loan modification is leverage through knowledge of the law.
Prior to the enactment of the Homeowner Bill of Rights, Foreclosure defense lawsuits in CA are typically dismissed as a matter of law. The GOMES case is typically used by a trial court level judge to clear the court’s docket of such cases at the very early stages. The court’s rationalized that GOMES stood for the broad proposition that CA borrowers could not challenge non-judicial foreclosure based on “standing” or who owned the loan.
The GLASKI ruling validates our position that this interpretation is incorrect and unfair. The foreclosure industry players no longer have such immunity from lawsuits, especially where the chain of title of a homeowner’s loan is in question or based on “robo-signed” assignments or substitutions of trustee. Specifically, GLASKI relates to loans that are now allegedly owned by Mortgage Backed Security Trusts by way of an Assignment of Deed of Trust that purports to convey loan ownership and the “power of sale” to such an entity AFTER the Trust has “closed out”.
According the appellate court: “We conclude that a borrower may challenge the securitized trust’s chain of ownership by alleging the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust’s closing date. Transfers that violate the terms of the trust instrument are void under New York trust law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement.” For full text, SEE http://www.scribd.com/doc/158877944/Glaski-v-Bank-of-America-CA-Court-of-Appeal-Opinion-7-31-2013#download
Mortgage securitization is a good thing for a real capitalism, just not where “casino capitalism” is practiced. When managed properly, mortgage securitization provides a market place for loan originators to sell their loans and refresh capital while providing cash rich bond investors with an investment backed by 5,000 mortgages. But when the trust creator’s or sponsors of these trusts seek to game the system by purchasing overly risky loans and then failing to properly transfer the loans to the trusts, both investor and borrower is harmed.
That is exactly what happened. Not only where many of the loans purchased by the trust much riskier than disclosed, but the Big Bank sponsors of the investment trust FAILED TO PROPERLY TRANSFER thousands of Mortgage Notes from originator to the trust in the manner required by contract and pursuant to IRS regulations. Hence, the need for ROBO-SIGNERS to create and execute phony assignments designed to create the illusion that the Trusts really did own the defaulted loans that no one now wants. Like a massive game of HOT POTATOE, the big banks’ default processing industry caused the manufacture of thousands of assignments that purported to dump the liability of these loans into the trusts AFTER the loan were already in default and worth less than the purchase price. The practice effectively screwed the trust investors and was an attempt to shield the trust creators for liability related to the “failed” securitization of the risky loans.
Until last week, courts have repeatedly told the Firm that only investors, not borrowers, had “standing” to raise this issue and challenge the idea that a late sale to foreclosing mortgage backed security trust was not simply VOID as a matter of law. GLASKI represents a huge break through that will benefit homeowners and investors by now allowing some light to shone on the ROBO-SIGNING process.
The take away is that if an assignment occurred AFTER the closing date of the Trust (typically 90 days after origination), then the transfer is VOID under the New York law that controls most Mortgage Trusts. If the transfer is VOID, then one has to look to the loan originator to determine who the party is entitled to enforce the note, pursue foreclosure, consider loan modification or agree to a SHORT SALE. Furthermore, the big banks assertion that they are the authorized loan servicer is also thrown into question. As a real estate agent, it can no longer be assumed that you are negotiating with an agent of the true owner of the loan. Where the loan originator is already bankrupt (New Century, Countrywide) or placed into receivership with the FDIC (Washington Mutual, Indy Mac), getting to the true decision maker gets even more convoluted.
The bottom line is that GLASKI represents a seismic shift in the foreclosure game in California for Real Estate Pros and Homeowners. Whether in default, post foreclosure or post short sale, homeowners now have legal recourse for damages and injunctive relief against the big banks’ use of VOID ROBO-SIGNED assignments to wrongfully foreclose. But given the legal complexities and uncertainties ahead, neither homeowners nor real estate pros should attempt to go forward without competent and experience legal counsel. An attorney review of every foreclosure document is now required. Contact the FIRM to set up a title review, consultation and evaluation of all legal options. -J. Arthur Roberts, Esq.