350 P.3d 1201
N.M. Ct. App.2015Background
- In 2006 Borrowers executed a $250,000 promissory note secured by a mortgage; the note was indorsed in blank and later came into Deutsche Bank's possession.
- The mortgage was assigned to Deutsche Bank on September 13, 2010; Deutsche Bank began foreclosure after Borrowers defaulted.
- Deutsche Bank moved for summary judgment asserting it was the holder entitled to foreclose; the district court granted the motion.
- Borrowers submitted an expert affidavit asserting the trust closed in July 2006 and that a 2010 assignment may have violated the trust’s pooling and servicing agreement (PSA).
- Borrowers argued the assignment was void under the PSA and thus Deutsche Bank lacked standing; they did not include the PSA in the record.
- The district court and the Court of Appeals held that borrowers who are neither parties nor third‑party beneficiaries of a PSA cannot challenge alleged PSA violations to defeat standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Deutsche Bank had standing to foreclose | Deutsche Bank: its possession of the note indorsed in blank made it the holder entitled to foreclose | Borrowers: assignment into the trust after the trust closed and in violation of the PSA was void, so Deutsche Bank never validly held the mortgage/note | Court: Deutsche Bank was the proper party; borrowers cannot challenge PSA noncompliance because they are not parties or third‑party beneficiaries |
| Whether alleged PSA violations render an assignment void (allowing borrower challenge) | Borrowers: some authorities say assignments violating a PSA are void and therefore challengeable by borrowers | Deutsche Bank: such alleged violations are generally voidable, not void, and borrowers lack standing to raise them | Court: declined to adopt decisions treating PSA breaches as void; majority rule treats such defects as not giving borrowers standing |
| Applicability of Romero (note endorsement issues) | Borrowers relied on Romero to challenge standing | Deutsche Bank: Romero addressed conflicting indorsements on the note, not PSA challenges | Court: Romero is distinguishable; here Deutsche Bank possessed a note indorsed in blank, so Romero’s rationale does not negate standing |
| Sufficiency of record to show PSA governs or was breached | Borrowers: expert affidavit referenced a PSA and online link asserting trust closed earlier | Deutsche Bank: PSA was not in the record as required; assertions insufficient | Court: record lacked the PSA; Borrowers failed to meet Rule requirements and thus did not raise a genuine issue of material fact |
Key Cases Cited
- Bank of New York v. Romero, 320 P.3d 1 (N.M. 2014) (addressing standing when note contains conflicting indorsements)
- Reinagel v. Deutsche Bank Nat’l Trust Co., 735 F.3d 220 (5th Cir. 2013) (borrowers who are not parties or beneficiaries cannot enforce PSA terms)
- Culhane v. Aurora Loan Servs. of Neb., 708 F.3d 282 (1st Cir. 2013) (mortgagor may challenge an assignment that is void as a matter of law, but not defects that render an assignment merely voidable)
- Rajamin v. Deutsche Bank Nat’l Trust Co., 757 F.3d 79 (2d Cir. 2014) (criticizing decisions that treat PSA violations as automatically void and explaining ratification/voidable framework)