Although a person who does not own the instrument or who wrongfully possesses the instrument “may be . . . entitled to enforce the instrument,” id. § 4-3-301,a mortgagor has a defense to payment, and derivatively, foreclosure, “if the person seeking enforcement of the instrument does not have rights of a holder in due course and the [mortgagor] proves that the instrument is a lost or stolen instrument,” id. § 4-3-305(c).

Why is this important you say? Because it is at the heart to determine that lenders who cannot meet the burden of a “holder in due course” do not have the legal right to foreclose.

In 2012, The Tenth Circuit decided .” McDonald v OneWest Bank, F.S.B., 680 F.3ed 1264, 1266 (10th Cir. 2012) concluding that there was no law requiring that the entity entitled to enforce had to be a holder in due course. This was an issue of state law that should have been Certified to the Colorado Supreme Court to determine.

In 2013, the Colorado Appellate Court decided Deutsche Bank Trust Company Americas v. Samora, 2013 COA 81 that said:

said at ¶ 47 “Because the warranty deed is not void, in order for Samora to defeat Deutsche Bank’s claim to quiet title in the Trust, she must show that Deutsche Bank as trustee is not advancing a claim by the Trust as a holder in due course of the Note and Deed of Trust.”

It is apparent that Samora could defeat the Trust in a Quiet Title Action if the Trust was not a holder in due course. Why should the result be different if the Trust foreclosed on her in a Rule 120 or a Rule 105 and obtained “good title”? If she, or Brumfiel could prove that the Trust was not a holder in Due Course as an “owner” of the note, the Trust should not be able to foreclose.

Colorado law does have much to say on the “Holder in Due Course” issue. They just didn’t bother to look.(See Myrick vs Garcia, 332 P.2d 900 (1958) and Clinton GEORG and Freestyle Sports Marketing, Inc., Petitioners v. METRO FIXTURES CONTRACTORS, INC., No. 07SC26.(2008)

My name is Reuben Nieves, reuben.nieves@yahoo.com