Svrcek v. Rosenberg
203 Md. App. 705
| Md. Ct. Spec. App. | 2012Background
- Foreclosure action filed Oct 8, 2009 by substitute trustees Rosenberg, Meyer, Ansell; sale completed Jan 29, 2010 to Citibank, N.A. as Trustee; circuit court ratified sale July 14, 2010; Svrcek appeals challenging standing and validity of proceedings.
- Note secured by Deed of Trust dated Nov 4, 2005 to Taylor, Bean & Whitaker Mortgage Corp.; loan later securitized into Structured Asset Mortgage Investments II Bear Stearns ALT-A Trust Series 2006-4; Citibank, N.A. as Trustee named as owner of the debt through servicing by EMC Mortgage Corporation.
- Around 2006 the loan was transferred into the securitized pool; for about three years Svrcek paid EMC Mortgage Corporation; notice of intent to foreclose issued July 31, 2009 identifying Taylor Bean & Whitaker as lender and EMC Mortgage Corporation as servicer.
- October 22, 2009 EMC Mortgage Corporation, as Attorney in Fact for Citibank, N.A. as Trustee, executed deed of appointment of substitute trustees; order to docket filed with supporting documents, including a lost note affidavit later produced.
- Trial court found deficiencies in the order to docket; deficiencies were cured; motion to stay the sale denied as untimely; sale ratified July 14, 2010; appeal followed.
- In 2010, Maryland enacted curative legislation (HB 633) allowing substitution or appointment of an individual as trustee even if prior deed naming a corporate trustee existed, affecting the validity of trusts as to foreclosures.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellees had the legal right to initiate foreclosure | Svrcek argues lack of standing to foreclose. | Appellees held or were entitled to enforce the note via trustee’s power of sale. | Affirmative; appellees had right to foreclose and initiate the action. |
| Whether the substitute trustees’ appointment was valid given lack of recorded power of attorney | Appointment executed by attorney in fact without a recorded power of attorney; invalidates appointment. | Appointment merely seeks to appoint substitute trustees, not convey property; not subject to §4-107(a). | Affirmative; issue not preserved, but, anyway, appointment valid as substitute trustees. |
| Whether the deed of trust was void for not naming an individual trustee and if curative legislation could validate it | Deed of trust void; retroactive curative statutes cannot validate void conveyances. | Curative Act retroactively cures defects and validates substitutions; does not violate due process. | Affirmed; curative statute valid; substitution of individual trustee permitted; deed not void. |
Key Cases Cited
- Bates v. Cohn, 417 Md. 309 (Md. 2010) (injunctions in foreclosure actions; abuse of discretion standard)
- Anderson v. Burson, 424 Md. 232 (Md. 2011) (lost note affidavits and evidentiary requirements; chain of possession)
- Le Brun v. Prosise, 197 Md. 466 (Md. 1951) (notes and deeds of trust; transfer of note carries with it security)
- Dollar Investment Co. of Md., Inc. v. Paton, 236 Md. 94 (Md. 1964) (substitution of trustees; authority to substitute)
- Dryfoos v. Hostetter, 268 Md. 396 (Md. 1973) (curative acts; retroactivity and due process limits)
- Grove v. Todd, 41 Md. 633 (Md. 1875) (curative statutes and retroactivity; limits to vested rights)
- Maddox v. Cohn, 424 Md. 379 (Md. 2012) (lost instruments; issues with bundled mortgages and MERS)