A five-judge panel of the California Supreme Court dismissed the five largest banks’ request to have the verdict in Glaski v. Bank of America depublished in spectacular fashion. For unclear reasons, two of the seven judges recused themselves. While the banks may have tried to overturn the contentious Glaski decision, they were afraid of a Supreme Court finding upholding it, so they instead chose to seek depublication, which they lost.
The Supreme Court’s groundbreaking ruling will have a huge impact, giving homeowners who are facing foreclosure or have previously been foreclosed on unassailable authority to pursue damages for wrongful foreclosure. Since 2008, Stephen Foondos, the founder of the United Law Center (ULC) in Roseville, Calif., and one of the attorneys who advocated against depublication has led his team in suing banks for illegal foreclosure. Because the banks don’t want to challenge Glaski in a jury trial, ULC has been able to use this case to help thousands of California homeowners fight back against their mortgage lenders and win. Since the publication of Glaski, ULC has experienced a significant increase in the number and value of case settlements. Principal reductions of 30 to 70 percent, interest rates fixed at 2-3 percent for 30 years, and a cash reward of six figures are all possible in cases where “Glaski” is alleged.
“The banks, fearing the appellate process, tried depublication and failed. While the banks argued that the Glaski decision could have a catastrophic impact on the banking industry, it’s a major victory and real step forward in the long legal fight to provide the real victims of the foreclosure crisis, the homeowner, true relief,” explained attorney Foondos. “We’re ecstatic about the Calif. Supreme Court’s decision. It’s yet another indication of the direction in which the law is turning in this banking brawl, directly in favor of California homeowners.”
The Glaski case stands for the straightforward notion that an organization must possess a debt in order to collect it (or foreclose on a mortgage) in California. Furthermore, if ownership is claimed by an assignment, the assignment must be genuine. “Securitization” is the process of a bank assigning a promissory note to a Mortgage-Backed Security Trust (a “Securitized Trust”). Mr. Glaski’s note had to be transferred within 90 days of the Securitized Trust’s closing date, as required by New York law and Federal Securities Law. This is known as the “90 Day Rule.” If the securitization lasts more than 90 days, it is regarded void from the start.
Because the Securitized Trust did not hold Mr. Glaski’s note, it was unable to foreclose legitimately, and the foreclosure was thus improper. The California Court of Appeals ruled in favor of the plaintiff. And while Glaski is viewed as an outlier in Federal Courts, “The Court’s decision to deny the banks’ request for depublication of Glaski affirms that it is the law of the land in California, and we have been granted the right to sue in California Superior Court,” says Foondos.
Between 2003 and 2008, it is believed that 70-80 percent of all California homeowners who financed a home had their note securitized. According to Foondos, about 1.3 million properties may have been wrongly foreclosed upon and may have grounds to sue their original lender for damages as a result of the Glaski judgment.
Borrowers have the right to contest void Deeds of Trust Assignments.
The appellate court in Glaski v. Bank of America held that a borrower can bring a wrongful foreclosure claim based on allegations that the foreclosing party acted without authority because the assignment by which it purportedly became beneficiary under the deed of trust was not only avoidable but also void. For a variety of reasons, subsequent appellate court opinions refused to follow Glaski.
The California Supreme Court decided in Yvanova v. New Century Mortgage whether a borrower on a home loan secured by a deed of trust can bring a wrongful foreclosure action based on allegations that a purported assignment of the note and deed of trust to the foreclosing party contained defects rendering the assignment void.
The matter has finally been resolved. The holding in Yvanova: “…because in a nonjudicial foreclosure only the original beneficiary of a deed of trust or its assignee or agent may direct the trustee to sell the property, an allegation that the assignment was void, and not merely voidable at the behest of the parties to the assignment, will support an action for wrongful foreclosure.”
The holding is a very narrow one. “We hold only that a borrower who has suffered a nonjudicial foreclosure does not lack standing to sue for wrongful foreclosure based on an allegedly void assignment merely because he or she was in default on the loan and was not a party to the challenged assignment. We do not hold or suggest that a borrower may attempt to preempt a threatened nonjudicial foreclosure by a suit questioning the foreclosing party’s right to proceed.”
The court determined that prejudice was not an element of wrongful foreclosure, which some courts had regarded and utilized to deny a foreclosed plaintiff the opportunity to challenge a void assignment. “A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity’s hands. No more is required for standing to sue.”
The court did not rule on the issue of tender, which some courts have ruled must be asserted to support a right of action for wrongful foreclosure: “we express no opinion as to whether a plaintiff must allege tender,” except the court noted that “[t]ender has been excused when, among other circumstances, the plaintiff alleges the foreclosure deed is facially void, as arguably is the case when the entity that initiated the sale lacked authority to do so.”
In conclusion, a borrower who has been the victim of a nonjudicial foreclosure sale has the standing to sue for wrongful foreclosure based on a supposedly worthless assignment. The absence of standing is not due to default or the fact that the borrower was not a party to the assignment.
For information on foreclosure defense call us at (877) 399 2995. We offer litigation document review support, mortgage audit reports, securitization audit reports, affidavit of expert witness notarized, and more.