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This decision reflects the changing judicial climate in which the courts are taking a closer look at these transactions. They don’t like what they are seeing and in this case, the appellate court practically recommended a RICO action.
The essence of this case is that it enables homeowner, EVEN IF THERE WAS AN ALLEGED DEFAULT, to file defenses or an action for damages and challenge based upon the allegation that the assignment was false. And THAT in layman terms, means that the assignment is just piece of paper that purports to be evidence of a transaction in which the debt, note and mortgage were transferred. If no such transaction exists, then the assignment is void, even if it is recorded, thus opening the door for nullification of the mortgage or at least the assignment.
Hence discovery directed at the actual transaction in which money was paid and delivery of the debt, note and mortgage followed, should now be allowed.
CAUTION: THIS ISSUE MIGHT BE DECIDED LARGELY ON PROCEDURAL GROUNDS WHEN USED AS A DEFENSE. If you have not asked for the documents, correspondence etc. as to the underlying transaction for the loan, the “assignment” or the endorsement, then you will have nothing to impeach the witness or the assignment as an exhibit.
While this is a Federal District case from Ohio, it should be used as very persuasive authority for the reasoning and analysis that the Sixth Circuit Court of Appeals applied. It also highlights why pro se litigants should at least consult with licensed attorneys as to strategy and tactics.
These the important excerpts in my opinion:
“We remand the case to the district court with instructions to permit Slorp to amend his complaint to add a RICO claim.
“Slorp does not attribute his injuries to the false assignment of his mortgage; rather, he attributes his injuries to the improper foreclosure litigation. According to the complaint, Bank of America (through LSR) filed a foreclosure action against Slorp despite its lack of interest in the mortgage; the defendants misled the trial court by fraudulently misrepresenting Bank of America’s interest in the suit; and Slorp incurred damages when he was compelled to defend his interests. If Bank of America had no right to file the foreclosure action, it makes no difference whether Slorp previously had defaulted on his mortgage.2
“The district court in Livonia Properties stated that an individual “who is not a party to an assignment lacks standing to challenge that assignment,” and our Livonia Properties opinion quoted and endorsed that general statement, perhaps inartfully. 399 F. App’x at 102. But we quickly limited the scope of that rule, clarifying that a non-party homeowner may challenge the validity of an assignment to establish the assignee’s lack of title, among other defects. Id. (citing 6A C.J.S. Assignments § 132); see also Carmack v. Bank of N.Y. Mellon, 534 F. App’x 508, 511– 12 (6th Cir. 2013) (“Livonia’s statement on standing should not be read broadly to preclude all borrowers from challenging the validity of mortgage assignments under Michigan law.”). Thus a non-party homeowner may challenge a putative assignment’s validity on the basis that it was not effective to pass legal title to the putative assignee. See Conlin v. Mortg. Elec. Registration Sys., 714 F.3d 355, 361 (6th Cir. 2013); Livonia Props., 399 F. App’x at 102; see also Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 353–54 (1st Cir. 2013); 6A C.J.S. Assignments § 132 (“The debtor may also question a plaintiff’s lack of title or the right to sue.”).
Filed under: foreclosure