BRYLLAW LITIGATION: First Quiet-Title Order in Virginia Voiding Deed of Trust (by default)
On November 21, 2011, a Northern Virginia Circuit Court entered an order granting plaintiff homeowner a default judgment in a quiet title action, voiding the deed of trust.
Earlier this year, frustrated by the fact that she could not get to the real party in interest to modify a loan, the homeowner went on the offensive and filed a court action to quiet title to her property and seeking nullification of the deed of trust supposedly encumbering the property with a first mortgage. Subsequently, a bank servicer (posing as an owner) moved to intervene into the case on the grounds that it’s ownership rights in the debt and the property would supposedly be at stake. The homeowner successfully opposed the motion and the motion was withdrawn.
Because none of the remaining defendants responded, the homeowner moved for judgment by default, seeking nullification of the deed of trust. The judgment was granted and the court entered an order voiding the deed of trust. This appears to be the first ruling of this kind in Virginia. Similar rulings have been obtained in Missouri, Arkansas, Utah, Texas, and Florida.
A redacted signed order can be accessed here…
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In the absence of an assignment, one must have been entitled to said assignment when initiating the foreclosure process (i.e., is the foreclosing entity the bona fide purchaser) See supra note 27.
Courts have understandably approached this argument with great skepticism, essentially asking
“Fraud against whom? They are holding the original Note.” Homeowners assert the argument is sound on the basis that fraud is committed against the land records, actual owners of the debt (often securitized mortgage pools), and homeowners who are denied an opportunity to deal with the true owner of the debt as its identity is often undisclosed.
62 Furthermore, the foreclosure and challenge thereto, both being actions in equity, the question should be whether or not the entity is, in fact, the owner of the debt; not whether it has a piece of paper in its possession.
64 For example, a servicer who executes and records documents stating it is owner and holder of the Note, but, in fact, is an entity merely in possession for servicing purposes DOSE NOT make itself the owner (party secured by the deed of trust) by mere possession of the Note.
In Stimpson v. Bishop, the Supreme Court of Virginia recognized that the purchase of a secured
debt carries with it the security, but “[a] mortgage secures a debt, and not the note, or bond, or other evidence.” 82 Va. 190, 195 (1886). This is because “[a] court of equity [] looks to substance, not to form, it looks to the debt which is to be paid, not to the hand which may happen to hold it.” Id. at 196. (internal citations omitted) (emphasis in original). See also Williams v. Gifford, 139 Va. 779 (1924) (“. . . the rule of law invoked [that the Deed of Trust follows the Note] relates only to bona fide purchasers of the notes”); DoT at ¶ (G) ([T]he Deed of Trust defines “Loan” as “mean[ing] the debt evidenced by the Note .. .”) (emphasis added).
(65) Pursuant to 15 USC 1641(f)(2):
A servicer of a consumer obligation arising from a consumer credit transaction shall not
be treated as the owner of the obligation for purposes of this section on the basis of an
assignment of the obligation from the creditor or another assignee to the servicer solely
for the administrative convenience of the servicer in servicing the obligation.
See also supra note 60.
66 “‘Artificial presumptions, made by the law itself, are not in general used as rules of evidence
for the purpose of ascertaining doubted facts, but are, in effect, mere arbitrary rules of law, which,
according to the policy of the law, operate in some instances conclusively, and which in other instances again, where a peremptory and absolute operation would be attended with inconvenience, may be answered and rebutted.’ 3 Starkie, Ev. marg. P. 1241. See also 1 Greenl. Ev. §§ 14, 17, 39.” Tunstall’s Adm’r. v. Withers, 80 Va. 892, 11 S.E. 565, 567 (1890).
Pro Se , PARALEGAL
Minatti Group Inc (c)TM,
MGIXIII@OUTLOOK.COM
notes from studies ” VOLUME XXXII, NUMBER 1 ” (see ….. Notes by Fee Simple 2011 http://www.vsb.org/sections/rp/index.htm)
🙂 VA~ ^v We The People……..
be nice to know the public records on this case …. ( even if appealed) CASE NUMBERS are always great resources of public documents. ( FEE SIMPLE)
What puzzles me is that the copy I received of this case had all of the pertinent information redacted, including the county (presumably Clarke or Loundon because of the appearance of six letters being redacted) where the suit was filed and the case number. It’s one thing to rant about a case but to redact all of the information about the case after you’ve achieved victory is troubling. As a paralegal, I would have checked Virginia statutes to see whether publication is required. In most states, if you file a quiet title action, I’ve seen where a motion and order of publication against unknown defendants is issued by the court and 4 consecutive publications appear in the legal notices. I did not see evidence of an order of publication in this instance. Most of the instances where summary judgment and quiet title have been challenged is in defective service. Publication takes care of unknown defendant claimants. I have a tendency to agree with the author here, in light of the Groves case in Texas; MERS obfuscates the true parties in interest, so if you serve the original lender, who in many cases is bankrupt, counsel appears to think all is well. However, the cases I’ve research are showing me that BOTH known and unknown parties must be served. The reason MERS came in on the Kesler case and the Groves case was because of default. MERS was never notified. Since MERS doesn’t hold the note, it claims it’s the nominee for the lender who does. When asked to produce the name of the lender, MERS’s counsel winds up into a little ball and like a chickens**t, instead of following logical procedure to prove its claim, it removes the cases to federal court in an attempt to slam-dunk the proceeding. It’s no wonder no one wants to play with people who act sore about it. A quiet title action is what it is. The banks do NOT know how to proceed with QT actions, as evidenced in Ibanez. Their counsel needs to wake up and smell the procedure: you either CLAIM or DISCLAIM. If you don’t have an interest, you don’t get to remove it to federal court; you disclaim your interest, get out, and save your clients a bunch of legal fees. This appears to be non-productive for the lender’s counsel, as billable hours don’t kick in unless you can drag the case through the mud and rack up fees from your lender client. This is the game the lenders’ attorneys are playing with MERS and the lenders … billable hours games. Let’s make a mockery of the proceedings, shall we? This is part of the reason judges are not keen on these types of procedures because of the games that are played by counsel. Price v. Tyler in Florida does not allow for attorneys to collect fees on quiet title actions; so to that end, the game appears to have shifted to improper answers and thwarting decisions. At some point, the borrower’s counsel is going to have to direct the action here and make these cases so state-airtight that they are not likely to be removed to federal court. Look at the Utah cases as an example.
If you notify MERS, MERS then turns around, tells its buddy the OCC who it answers to as part of the Consent Order, that it’s been sued again, this type by Borrower X. Then MERS goes into its database, digs up whoever happens to be holding the “commercial paper” at the time and jumps out of the closet like the boogey man. No chain of title to back up its claims. The chain of title never matches the chain of custody of the note. Banks attorneys are telling me once the chain becomes convoluted, you cannot legally reconstruct it. This is what quiet title actions are for. MERS doesn’t own the note. It has no standing. MERS can’t be a trustee and foreclose. The deed of trust act doesn’t include MERS. MERS can’t hold legal title. The trustee holds legal title according to statute. Could it be that MERS is tortiously interfering with contract because of this? If MERS acts as the trustee and claims to have the power of sale, then what the hell do we need the stinking deed of trust act for? The trustee clearly has the power of sale and applicable law denies MERS that right. is anyone arguing that yet? They probably could have used that argument in the Sauerman case in Michigan, huh? Oh well, if it ain’t legal advice, you can’t use it.
This case is still in Litigation. Onewest as successor to Indymac refiled their motion to set aside the quiet title. We (LFA) provided the Securitization Audit in this case. It is our understanding that Onewest is claiming that they were never served which may or may not be the case, what is absolutely true is that Onewest was not in the land record. MERS leaves parties of non-interest in the local land record. If true parties of interest are concealed by MERS it begs the legal question do litigants have an obligation to serve such a concealed party. Further, Onewest had filed a motion to intervene and withdrew the motion. This alone shows that they were obviously not harmed by not being served (if they were not served) and had ample opportunity to respond.
Well if you consider that this is a proceeding in rem , I don’t think personal service (and in personam jurisdiction) is as important as the bank thinks. If they motioned to intervene, then they had actual knowledge of an action against the property and failed to protect their legal right. Obviously they were attempting to kick the can down the road. Most likely so they had time to forge documents.
Jeff,
Glad to see you’re still swinging the bat. I am still looking at my own options on my note & DOT.
Mark