U.S. Bank v. CONGRESS | Alabama Appeals Court Reverses Decision on Chain of Title Case, Ruling Hinges on Question of Bogus Allonges

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U.S. Bank v. CONGRESS | Alabama Appeals Court Reverses Decision on Chain of Title Case, Ruling Hinges on Question of Bogus Allonges

U.S. Bank v. CONGRESS | Alabama Appeals Court Reverses Decision on Chain of Title Case, Ruling Hinges on Question of Bogus Allonges

Via NakedCapitalism-

In a unanimous decision, the Alabama Court of Civil Appeals reversed a lower court decision on a foreclosure case, U.S. Bank v. Congress and remanded the case to trial court.

We’d flagged this case as important because to our knowledge, it was the first to argue what we call the New York trust theory, namely, that the election to use New York law in the overwhelming majority of mortgage securitizations meant that the parties to the securitization could operate only as stipulated in the pooling and servicing agreement that created that particular deal. Over 100 years of precedents in New York have produced well settled case law that deems actions outside what the trustee is specifically authorized to do as “void acts” having no legal force. The rigidity of New York trust has serious implications for mortgage securitizations. The PSAs required that the notes (the borrower IOUs) be transferred to the trust in a very specific fashion (endorsed with wet ink signatures through a particular set of parties) before a cut-off date, which typically was no later than 90 days after the trust closing. The problem is, as we’ve described in numerous posts, that there appears to have been massive disregard in the securitization for complying with the contractual requirements that they established and appear to have complied with, at least in the early years of the securitization industry. It’s difficult to know when the breakdown occurred, but it appears that well before 2004-2005, many subprime originators quit bothering with the nerdy task of endorsing notes and completing assignments as the PSAs required; they seemed to take the position they could do that right before foreclosure. Indeed, that’s kosher if the note has not been securitized, but as indicated above, it is a no-go with a New York trust. There is no legal way to remedy the problem after the fact.

[NAKED CAP]

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3 Responses to “U.S. Bank v. CONGRESS | Alabama Appeals Court Reverses Decision on Chain of Title Case, Ruling Hinges on Question of Bogus Allonges”

  1. lies is all they tell says:

    so what does this do to all the mortgages where we have an investor but not trust????

  2. lies is all they tell says:

    my sisters s. florida foreclosure her assignment was recorded 3 days before lis pens. was a predatory loan. if you know any lawyers that want a pro bono case for a single mom widow to fight an appeal for her please email ssssssister@yahoo.com. 2 foreclosures one in miramar and one in pembroke pines. please if you you know anyonw. I am fine i have one of the most outstanding team on my foreclosure. we all need to help my sister please thanks
    ps. just like the mills use 10 mon old newbie lawyers to do their dirty work maybe a new lawyer would like to take her case ans set precense in s. florida??????

  3. Pamela Edwards says:

    I brought this up to the judge that heard my foreclosure case.He acted like he didn’t know about the PSA and when I asked about NY trust laws said they did not apply in WA. state.I also brought up that US Bank tried to enter my mortgage in the trust 4 years after the PSA closing date,he told me thats just the way it is done and I neede to butt out.Really?Seriously?Judges don’t know crap about this as its supposed to never come up in thier world.

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