Wells Fargo Bank, N.A. v. Freed
2012 Ohio 5941
Ohio Ct. App.2012Background
- Freeds signed a $308,000 promissory note to OOMC and granted a mortgage on their home in 2007.
- Trustee sued in 2009 to foreclose for default after AHMSI became servicer and alleged transfer of the note into a trust via PSA.
- Trustee relied on an allonge, PSA, Agreement, Assignment, and POA to show enforceability of the Note.
- The allonge was contested as undated, unsigned by an identified person, and not affixed to the Note; the Assignment was dated 2009 but identified a non-owner entity as transferor.
- Bench trial in 2011 found Trustee had standing as a holder or nonholder with rights of a holder and awarded $389,378.42.
- Freeds argued the penalty of $2,900 from a prior refinance was improperly included; evidence showed Sand Canyon admitted it should not have been in the balance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to foreclose | Trustee has rights of enforcement via PSA; properly vested as holder/nonholder with rights of holder. | Trustee not a holder; defective allonge and Assignment negate standing. | Trustee is a nonholder in possession with rights of a holder; standing affirmed. |
| Validity of transfer documents | PSA transfers rights to Trustee; allonge and Assignment defects are immaterial to enforceability. | Allonge not properly attached; Assignment invalid to transfer ownership. | Defects do not defeat Trustee’s status as nonholder with rights of a holder. |
| Amount due and payable | Note balance including all charges is enforceable; borrower signed with knowledge of the balance. | Penalty should not have been included; balance overstated and interest miscalculated. | Court affirmed full amount including the $2,900 penalty; Freeds signed with knowledge of the balance. |
Key Cases Cited
- Wells Fargo Bank, N.A. v. Sessley, 2010-Ohio-2902 (10th Dist. 2010) (standing in foreclosure; holder/nonholder analysis)
- Mtge. Electronic Registration Sys., Inc. v. Vasick, 2010-Ohio-4707 (6th Dist. 2010) (nonholder in possession with rights of a holder)
- Thompson, 2010-Ohio-4158 (2d Dist. 2010) (UCC attachment to an allonge and holder status)
- Shealey v. Campbell, 20 Ohio St.3d 23 (Ohio 1985) (real party in interest; standing requirements)