352 P.3d 734
Okla. Civ. App.2014Background
- Bank filed a foreclosure petition July 26, 2012 alleging Moody owners defaulted on a promissory note signed by James Moody payable to BSM Financial for $72,724.00.
- The copy of the Note attached to the petition showed a special indorsement from BSM to Taylor, Bean, and Whitaker and an undated blank indorsement by Taylor, Bean, and Whitaker.
- Owners challenged Bank's standing, arguing Bank had not shown it was entitled to enforce the Note before filing (relying on Brumbaugh and Byrams) and contested the timing/authorization of the blank indorsement.
- Owners also contended the petition was not filed in good faith because a loan modification request under HAMP (and related consent-judgment servicing standards) was pending, accusing Bank of improper dual-tracking.
- Trial court granted Bank’s motion for summary judgment; Owners appealed. The appellate court reviewed de novo and affirmed.
Issues
| Issue | Bank's Argument | Owners' Argument | Held |
|---|---|---|---|
| Standing / right to enforce note | Bank attached the Note with indorsements to the Petition showing possession and right to enforce pre-filing | Bank failed to prove it was entitled to enforce the Note before filing | Bank had standing; attachment of Note to Petition showed pre-filing possession and right to enforce |
| Timing and authorization of blank indorsement | Attachment of a Note bearing Taylor, Bean & Whitaker's blank indorsement proves the indorsement occurred pre-filing; no authority requires proof of signer’s authorization | Blank indorsement might be post-filing or unauthorized, creating a factual issue | No genuine issue: indorsement was on the Note attached to the Petition, and owners cited no authority requiring proof of signer’s authority |
| HAMP / consent-judgment servicing standards (dual-tracking) | HAMP/servicer obligations do not create an affirmative defense to foreclosure | Servicer’s failure to comply with HAMP or consent-judgment standards meant petition was not filed in good faith and foreclosure should be blocked | Failure to comply with HAMP or servicing standards does not provide a meritorious defense to foreclosure; majority of courts reject private HAMP causes of action |
| Bank officer affidavit authentication | Bank relied on possession of the Note attached to Petition, making affidavit unnecessary | Affidavit was invalid or insufficient for summary judgment | Court did not decide affidavit issues because the Note attached to the Petition sufficed to prove possession/pre-filing enforcement |
Key Cases Cited
- Deutsche Bank Nat. Trust Co. v. Brumbaugh, 270 P.3d 151 (Okla. 2012) (holding absence of indorsements on petition copy can create fact issue on when plaintiff became holder)
- Deutsche Bank Nat. Trust Co. v. Byrams, 275 P.3d 129 (Okla. 2012) (plaintiff must be entitled to enforce note before filing)
- J.P. Morgan Chase Bank Nat. Ass'n v. Eldridge, 273 P.3d 62 (Okla. 2012) (summary judgment reviewed de novo; inferences drawn for nonmoving party)
- Bank of Am., N.A. v. Kabba, 276 P.3d 1006 (Okla. 2012) (party seeking to enforce negotiable instrument must show holder status or entitlement under UCC)
- U.S. Bank, N.A. v. Moore, 278 P.3d 596 (Okla. 2012) (plaintiff must be entitled to enforce note prior to filing)
- Gill v. First Nat. Bank & Trust Co., 159 P.2d 717 (Okla. 1945) (ownership/possession required to commence foreclosure)
- Miller v. Chase Home Fin., LLC, 677 F.3d 1113 (11th Cir. 2012) (HAMP does not create an express or implied private right of action)
- Edwards v. Aurora Loan Servs., LLC, 791 F. Supp. 2d 144 (D.D.C. 2011) (borrower lacks due process rights under HAMP; third-party beneficiary theory rejected)