Borrower’s standing is limited
The Fourth District Court of Appeal, Division One (San Diego) issued the first published post-Yvanova ruling on March 17th. Saterbak v. JPMorgan Chase Bank, N.A held that a borrower bringing a pre-foreclosure suit lacks standing to challenge an assignment.
As summarized by UTA Legal Resources Chair, Martin T. McGuinn, Esq., Kirby & McGuinn, the ruling made several compelling points. Saterbak sought to cancel the assignment of the DOT securing her home pursuant to Civil Code section 3412. She argued that to withstand a demurrer, she merely needs to allege the assignment was void or voidable and that it could cause serious injury. The Court of Appeal held that Saterbak failed to state a cause of action under section 3412 because she cannot allege that MERS’s assignment of the DOT to the 2007–AR7 trust was void or voidable against her. Saterbak also fails to allege “serious injury.” She argues she “faces the prospect of losing her home due to the actions of an entity that has no power to foreclose because it does not own her [DOT].” However, even if the assignment was invalid, it could not “cause serious injury” under the statute because her obligations on the Note remained unchanged.
The borrower argued that the transfer to the current holder was outside the time limit provided for in the Pooling and Servicing Agreement (“PSA”) and thus void. Relying in New York law, which the PSA was governed by, the Court held that the borrower had no standing in a pre-foreclosure case to challenge the authority of a party to foreclosure and that an untimely transfer to the trust could be ratified by the trustee.
“The key point in the ruling is that the borrower’s standing provided by Yvanova is limited to post foreclosure cases,” said McGuinn. The narrow question under review in Yvanova was whether a borrower seeking remedies for wrongful foreclosure has standing, not whether a borrower could preempt a nonjudicial foreclosure. Because Saterbak brings a preforeclosure suit challenging Defendant’s ability to foreclose, Yvanova does not alter her standing obligations. Note the California Supreme Court accepted for review in October 2014 Keshtgar v U.S. Bank N.A. where the borrower is making a pre-foreclosure claim that the assignment is void.