This is a fantastic argument and analysis by the Fed Court in Missouri. FINALLY, a Judge who listens and understands! This argument is a door opener that leads to a path for “Quiet Title” if your loan has been securitized into a private MBS trust. Get a free securitization check, and if a trust is identified, move to have BP Investigative Agency secure the vital evidence before it’s “scrubbed” or dissappers.
Excerpts from Ball v. DBNTC:
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI, CENTRAL DIVISION
2012 U.S. Dist. LEXIS 179878
December 20, 2012, Decided
December 20, 2012, Filed
3. The Plaintiffs’ Standing to Plead Alleged Noncompliance with [*11] the Terms of the Pooling and Service Agreements
A number of cases have held that defects in the securitization process cannot be raised by a mortgagee to support a wrongful foreclosure claim. These courts seem to reason that, because the mortgagees are not parties to any of the securitization contracts, they have no standing to claim noncompliance with these agreements. See, e.g., In re Cook, 457 F.3d 561, 567-68 (6th Cir. 2006) (ruling that the failure to record an assignment of a mortgage as required by contract impacted the relationship of the parties to the contract, but did not impede the ability to enforce themortgage against third parties); In re Correia, 452 B.R. 319, 324 (1st Cir. B.A.P. 2011) (“[T]he Debtors lacked standing to challenge the mortgage’s chain of title under the PSA . . . . The Debtors cannot show they were a party to the contract . . . .”); Bittinger v. Wells Fargo Bank N.A., 744 F. Supp. 2d 619, 625-26 (S.D. Tex 2010) (rejecting mortgagor’s claim of wrongful foreclosure because mortgagor was not a party or beneficiary under the Pooling and Servicing Agreement and thus had “no ability under Texas law to sue for breach of contract.”). At least one court applying [*12] Missouri law has followed this trend. In re Washington, 2011 Bankr. LEXIS 4705, 2011 WL 6010247, at *5 (Bankr. W.D. Mo. 2011).
But the Plaintiffs do not seek to enforce the contracts or affect the relationship between the parties to the contracts. Rather, the Plaintiffs point to defects in the securitization process as evidence that neither title nor possession of the note passed to the trustee who sought to foreclose theirmortgages. Thus, the Plaintiffs seek only to use the breaches as evidence that the party seeking to foreclose is not the owner of their note. Missouri law is clear that a court may set aside a foreclosure sale as invalid when a circumstance denies the mortgagee the right to cause the power of sale to be exercised, Morris v. Wells Fargo Home Mortg., No. 4:11CV1452 CEJ, 2011 U.S. Dist. LEXIS 93729, 2011 WL 3665150, at *2 (E.D. Mo. Aug. 22, 2011), and ownership of the note is a prerequisite to foreclosure in Missouri, Williams v. Kimes, 996 S.W.2d 43, 45 (Mo. 1999)(en banc); In re Washington, 468 B.R. 846, 853 (Bankr. W.D. Mo. 2011).
While the Defendants rely on In re Washington, 468 B.R. 846 (Bankr. W.D. Mo. 2011), to claim that the Plaintiffs lack standing to raise breaches of the Pooling and Service Agreements, that [*13] case is distinguishable because theWashington court found that the note was a negotiable instrument and it was undisputed that the party enforcing the note possessed it at all times relevant to the note’s enforcement. Id. at 853-54. Consequently, the debtor could not have been injured by any improper assignment of the note. The analysis is necessarily different where, as here, the debtor claims that the party enforcing the note never possessed or had title to the note due to noncompliance with the Pooling and Service Agreement. Defendants certainly have the right to show that the breaches of the Pooling and Service Agreements alleged by the Plaintiffs did not affect either title or possession, but they have not done so in their Motions to Dismiss.
The Court’s conclusion is supported by Barker v. Danner, 903 S.W.2d 950, 955 (Mo. Ct. App. 1995), which held that a debtor generally lacks standing to contest the validity of an assignment of debt, except if the debtor will be prejudiced. One form of prejudice is the potential that the debtor will be exposed to multiple judgments. See, e.g., id. at 955 (“[T]he only interest of the obligor being that he shall be required to pay his debt to [*14] but one person.” (quotation omitted));State ex rel. Williams v. Williams, 647 S.W.2d 590, 593 (Mo. Ct. App. 1983) (“The legitimate interest of a judgment debtor is to secure of record all proper credits on the judgment, the consequence of which is that the debt may be enforced only once.”); Livonia Props. Holdings, LLC v. 12840-12976 Farmington Rd. Holdings, 399 Fed App’x 97, 102 (6th Cir. 2010) (“Obligors have standing to raise these claims because they cannot otherwise protect themselves from having to pay the same debt twice.” (quotation omitted)). In fact, this is the very possibility that possession of the note is meant to prevent. See Washington, 468 B.R. at 853 (“Possession of the note insures that this creditor, and not an unknown one, is the one entitled to exercise rights under the deed of trust, and that the debtor will not be obligated to pay twice.”).
Thus, the Plaintiffs have standing to challenge the Defendants’ compliance with the Pooling and Service Agreements insofar as the alleged noncompliance impacted the Defendants’ possession of the note, because if the Defendants did not possess the note, this could expose the Plaintiffs to multiple enforcements of the note. [*15] This reasoning compels the same result if the note is nonnegotiable and the Defendants did not hold title to the note, as the Plaintiffs claim, due to defects in the securitization process. Thus, the Defendants’ Motions to Dismiss the Plaintiffs’ wrongful foreclosure claims and claims for declaratory judgment that Defendants have no right to foreclose are denied.