California Court Issues Decision Limiting the Reach of the Yvanova Decision
By: Regina J. McClendon and Matthew B. Nazareth
On March 16, 2016, California’s Fourth Appellate District issued its opinion in Saterbak v. JPMorgan Chase Bank, N.A., Case No. D066636, finding that a borrower does not have standing to challenge an assignment of her Deed of Trust before a foreclosure sale takes place.
While the California Supreme Court’s recent ruling in Yvanova v. New Century Mortgage Corp. found that borrowers may have standing, after the foreclosure sale has occurred, to pursue wrongful foreclosure claims based on a void assignment of the loan, Saterbak provides a strong basis for preventing preforeclosure sale actions based on securitization or fraudulent assignment theories.
The borrower in Saterbak sought to cancel the assignment of her Deed of Trust based on two familiar theories. She argued that the Assignment was executed and recorded after the closing date of the Pooling and Servicing Agreement (PSA) of the trust. She also argued that the Assignment should be cancelled because the signature was either forged or “robo-signed.
” At the trial court, JPMorgan demurred to the borrower’s complaint on the basis that, as a third party to the PSA and the Assignment, she lacked standing to challenge the Assignment. The trial court agreed and dismissed the complaint.
The central issue on appeal was whether the borrower had “standing to challenge the assignment of the DOT on the grounds that it does not comply with the PSA for the securitized instrument.” The Court first addressed the burden of establishing standing.
The borrower argued that the securitized trust should bear the burden of establishing the validity of the Assignment.
The Court rejected the argument and explained that as the party seeking to cancel the Assignment, the borrower must demonstrate “some such beneficial interest that is concrete and action, and not conjectural or hypothetical.”
The Court also distinguished cases in which an assignee filed a suit to enforce its assigned rights, explaining that those cases are inapplicable when a borrower files suit to challenge an assignment. ................(see link for entire article)