937 F. Supp. 2d 849
N.D. Tex.2013Background
- Green mortgaged her home in 2004 with a Deed of Trust naming MERS; CTX originated the loan and held the Note, indorsed in blank, with WaMu/MuWa later involved.
- After 2010 default, JPMC acquired the loan; Green allege acceleration/foreclosure notices by Taherzadeh on behalf of Brice et al.
- Green filed an amended complaint seeking quiet title, and asserted FDCPA, FCRA, negligence, and declaratory/injunctive relief against CTX, JPMC, MERS, MERSCORP, Brice, and Taherzadeh; Taherzadeh did not appear.
- Defendants moved for summary judgment (MSJ) on all MSJ-defendants’ claims; CTX moved to dismiss all CTX claims.
- The court granted the MSJ defendants’ summary judgment and granted CTX’s motion to dismiss, with final judgments entered as to JPMC, MERS, MERSCORP, and CTX; Green’s claims against CTX were dismissed with prejudice.
- Key legal issues centered on standing to challenge assignments, foreclosing authority, and validity of the Note/Deed relationships under Texas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to challenge assignments | Green may challenge void assignments to foreclose. | Borrowers lack standing to challenge assignments as void; only voidable grounds matter. | Green has standing to challenge voidness of assignments, but arguments fail on the merits. |
| JPMC’s standing to foreclose | Foreclosure requires original note and proper assignment chain. | Show-me-the-note is not required; MERS/assignment and possession suffice; notes can be transferred with the deed. | JPMC has standing to foreclose; possession of the Note and the Deed moving with the Note supports authority. |
| Effect of unrecorded assignments (192.007 vs 13.001) | Unrecorded assignments render the foreclose voidable or invalid. | Unrecorded instruments remain binding; 192.007 is administrative and does not invalidate the transfer; 13.001 controls. | Unrecorded assignments remain effective; section 192.007 does not void the transfer; 13.001 prevails or harmonizes; no genuine dispute. |
| Validity of CTX’s indorsement and CTX’s role | CTX’s blank endorsement on an allonge may be invalid. | Blank indorsement makes the Note payable to bearer; allonge endorsements valid under Texas law. | CTX indorsed the Note validly in blank; JPMC entitled to collect on the Note. |
Key Cases Cited
- Puente v. CitiMortgage, Inc., 2012 WL 4335997 (N.D. Tex. 2012) (standing to challenge assignments; Court quotes Texas rule that obligor may defend on grounds rendering assignment void)
- Miller v. Homecomings Fin., LLC, 881 F.Supp.2d 825 (S.D. Tex. 2012) (Texas homeowners may challenge chain of assignments; assignments may bind parties absent recordation)
- Glass v. Carpenter, 330 S.W.2d 530 (Tex.Civ.App.-Houston 1959) (debtor may assert grounds against assignee prior to notice of assignment)
- Preston v. Seterus, Inc., 931 F.Supp.2d 743 (N.D. Tex. 2013) (recordation not required for validity of transfer)
- Leavings v. Mills, 175 S.W.3d 301 (Tex.App.-Houston [1st Dist.] 2004) (Texas property interests; recordation not prerequisite to enforceability)
- Priesmeyer v. Pac. Sav. Bank, F.S.B., 917 S.W.2d 937 (Tex.App.-Austin 1996) (Texas authority on assignment validity and lien transfer)