A Watershed Moment in Foreclosure Battle: Judge McConnell Hailed as Savior to Thousands of Downtrodden Homeowners –Written by Babcock News.
Federal Court Judge John J. McConnell issued a decision in the Cosajay v. MERS case this week. This case provides the plaintiffs with an opportunity to over-turn thousands of home foreclosure cases and will be viewed as a watershed moment in foreclosure law. Judge McConnell’s decision in the case puts to bed once and for all the contention that homeowners have no right to challenge fraudulent assignments appearing in their chain of title.
In the 11 page decision, he wrote, in part:
“The Court DENIES Defendants’ Motion to Dismiss (ECF No. 5) and finds that Ms. Cosajay has standing to bring this lawsuit against Defendants … the Court finds that Rhode Island law provides that same dual ideas basis for deviating from the general contract rule … Therefore, the Court finds that Rhode Island law provides that same protection to mortgagors in the same situations in which the first circuit found the Culhane and Woods plaintiffs under Massachusetts law.”
This ruling will impact not only every foreclosure case filed in Rhode Island Supreme Court, but also every foreclosure case across the country. “By far, this is the biggest decision concerning home foreclosure by a judge in the country in recent years.” said Attorney Babcock. “Judge McConnell took one swoop of his pen and changed the outcome of thousands of home foreclosure cases”
Over the last five years the issue of whether or not a plaintiff (homeowner) can sue a defendant (a lender) has been challenged at every step of the ongoing home foreclosure battle. This ruling by McConnell will bring a new perspective to every home foreclosure case ruling thus far in the Rhode Island Courts, and reinvigorates homeowners resolve to continue fighting the bank and mortgage servicers. “As a result of the visionary decision by Judge McConnell, today is a new day in home foreclosure law.”
Here is an outline of the details of the ruling:
1. Borrower objected to the Report and Recommendation issued by the Magistrate recommending that a pending challenge to a mortgage foreclosure case be dismissed for lack of standing because borrower was not a party to the assignment documents.
2. Citing two recent cases, Culhane v, Aurora Loan Services of Nebraska, 208 F.3d 282, 289 90 (First Cir. 2013) and Woods v. Wells Fargo Bank, NA., No. 12 1942, 2013 WL 554363?, at * 3 (lst Cir. Oct. 9, 2013), the court in this case rejects the recommendations of the magistrate ruling “that a homeowner’s standing to sue is not foreclosed by virtue of their lack of privity to the assignment documents.”
3. In March, 2008, MERS, as nominee for the originating lender, purported to assign the mortgage to Deutsche Bank Trust Company Americas, as Trustee 4. Six months later, Deutsche assigned the mortgage to Saxon and in 2009, Saxon assigned the mortgage to CM REO Trust.
5. Saxon, on behalf of the CM REO Trust, initiated foreclosure proceedings in 2010. 6. This borrower action seeks to enjoin the foreclosure proceedings on account of the invalidity of the aoms (mortgage assignments).
7. The facts alleged by borrower to support her claim of manufactured and fraudulent documents include claims that the persons executing the assignments were not employees, officers, or properly authorized agents and that the signatures on the aoms were fraudulent/not authentic.
8. Borrower also claims that MERS, as nominee, did not have authority to assign her mortgage on the date of the First Assignment.
10. Borrower asserts that “…the mortgage had already been allegedly sold…and thus any assignment was invalid…(and) was (executed)outside the time specified by (the)…Securitized trust…”
11. Borrower also claims that the Deutsche Bank trust did not exist and that the Natixis Real Estate Capital Trust 2007 HE2 closed on April 30, 2007, making the 3/12/08 assignment to the Natixis trust an impossibility.
12. Borrower alleges that all the aoms were void; that the Defendants did not hold her mortgage or note, and that Defendants lacked standing to foreclose the mortgage or enforce the note.
13. Borrower is held to NOT be required to be a party in privity to a trust agreement in order to use the trust agreement to challenge standing in a foreclosure action.
14. The court recites the meme that an inquiry into standing necessarily involves both constitutional limitations on federal court jurisdiction and prudential limitations on its exercise citing concern to maintain and insist upon the proper and properly limited role of the courts in a democratic society.
15. The court also reaffirms that at least in federal court, standing to sue is an indispensable component of federal court jurisdiction.
16. Borrower has to also show injury in fact proximately caused by disputed conduct and has to request relief to redress the injury sustained.
17. In Culhane v. Aurora Loan Services, the court found that the foreclosure of a home “is unquestionably a concrete and particularized injury” and found a direct causal link between a challenged aom and the special harm alleged to borrower.
18. Stated another way, Culhane held that if a borrower was able to show that a party lacked the authority to foreclose, that the stage would be set for connecting the assignment to the challenged foreclosure and to redressing the borrower’s claimed injury.
19. If the court were to find that the defendants lacked authority to foreclose, then borrower’s injuries can be redressed through equitable relief and compensatory damages.
20. The court in this case finds that the magistrate’s focus on the prudential aspect of standing, “which overlays…(the) constitutional dimensions (of standing)” to find that borrower’s claims were in essence a lawsuit on a mortgage assignment to which borrower was not in privity to be misdirected and erroneous in light of Culhane and the appellate decision in Woods v. Wells Fargo Bank which held that “standing may be appropriate even where a mortgagor is not party to, nor beneficiary of, the challenged assignments.”
21. In Culhane, the court found that a borrower/mortgagor has a legally cognizable right under state law to ensure that any attempted foreclosure on her home is conducted lawfully especially where, as here, the mortgage contains a power of sale and the state’s law permits foreclosure without prior judicial authorization.
22. The court finds that similar to the MASS foreclosure process, Rhode Island law provides the same dual basis for deviating from the general contract rule and authorizing a borrower to challenge a foreclosure based on a bad aom and to challenge the bad aom as void.
What all of this means in plain English, is that in the past, the courts have ruled that since the mortgagee had no involvement in the subsequent sale of the mortgages, they had no standing to challenge the legal nature of those transaction and had no right to challenge the legality of those transfers to determine if the company foreclosing on their property had the legal authority to do so. Without that standing thousands of people have been foreclosed on without being able to question in court whether the company taking the foreclosure action had the legal right to do so.
This ruling affirms the right of the homeowner to question that legality, even though they were not party to subsequent company transfers. Further, if it is found in court that a homeowner’s claim of illegality of the company to foreclose is upheld, the homeowner is entitled to compensatory damages!
Given this ruling, everyone who has been foreclosed in this manner should look at re-opening and challenging the foreclosure process. Not only may you get your home back, but you possibly could receive damages for the illegal actions taken against you. Consult your attorney for advice as this is not legal advice, only the reporting of a very significant and positive ruling for besieged homeowners.