Backdated  Mortgage  Assignment  Comes  Back  To   Haunt  Foreclosure  Lender  in  Juarez  v.

 Select  Portfolio   (1st  Cir.  Feb.  12,  2013)  
U.S.  First  Circuit  Court  of  Appeals  Reinstates  Borrower’s  Wrongful   Foreclosure  Claim     In  a  rare  victory  for  a   wrongful  foreclosure   claimant  at  the  U.S.  Court   of  Appeals  for  the  First   Circuit  in  Boston,  the  court   reversed  a  dismissal  of  the   borrower’s  claims,  ruling   that  a  back-­‐dated  mortgage   assignment  rendered  a   foreclosure  void.  The  case   is  Juarez  v.  Select  Portfolio   Servicing,  Inc.  (11-­‐2431)  (click  for  opinion).     Backdated  Mortgage  Assignment  Proves  Fatal   Melissa  Juárez  purchased  a  home  in  Dorchester,  Massachusetts  on   August  5,  2005,  financing  it  with  reputed  sub-­‐prime  lender  New   Century  Mortgage.  The  mortgage  was  packaged  and  bundled  into   a  real  estate  mortgage  investment  conduit  (“REMIC”),  a  special  type  of   trust  that  receives  favorable  tax  treatment,  ultimately  being  held  by   U.S.  Bank,  as  trustee.  Juárez  could  not  afford  the  payments  on  the   mortgage  and  defaulted.  Foreclosure  proceedings  began  in  the   summer  of  2008,  culminating  in  the  sale  of  her  home  at  an  auction  in   October  22,2008.  She  claims,  however,  that  lender  did  not  hold  the   note  and  the  mortgage  at  the  time  they  began  the  foreclosure   proceedings  against  her,  and  that  the  foreclosure  was  therefore  illegal  

under  Massachusetts  mortgage  law.   The  problem  in  the  case  centered  around  the  mortgage  assignment   into  U.S.  Bank,  as  trustee  —  the  same  problem  the  same  bank  faced  in   the  landmark  U.S.  Bank  v.  Ibanez  case.  The  “Corporate  Assignment  of   Mortgage,”  appears  to  have  been  back-­‐dated.  It  was  dated  October   16,  2008  and  recorded  in  the  corresponding  registry  of  deeds  on   October  29,  2008,  after  the  foreclosure  had  been  completed.   However,  at  the  top  of  the  document,  it  stated:  “Date  of  Assignment:   June  13,  2007,”  in  an  obvious  attempt  to  date  it  back  prior  to  the   foreclosure.   First  Circuit  Reinstates  Borrower’s  Wrongful  Foreclosure  Claims   After  federal  judge  Denise  Casper  dismissed  Juarez’s  claims  entirely  on   a  motion  to  dismiss,  the  First  Circuit  reinstated  the  majority  of  Juarez’s   claims.  U.S.  Bank  claimed  that  the  back-­‐dated  mortgage  assignment   was  merely  a  confirmatory  assignment  in  compliance  with  the  Ibanez   ruling,  but  the  appeals  court  concluded  otherwise:   Nothing in the document indicates that it is confirmatory of an assignment executed in 2007. Nowhere does the document even mention the phrase “confirmatory assignment.” Neither does it establish that it confirms a previous assignment or, for that matter, even make any reference to a previous assignment in its body. Lacking  a  valid  mortgage  assignment  in  place  as  of  the  foreclosure,   U.S.  Bank  lacked  the  authority  to  foreclose,  the  court  ruled,  following   the  Ibanez  decision.  Ms.  Juarez  will  now  get  the  opportunity  to  litigate   their  claims  in  the  lower  court.      

Will  Lenders  Learn  Their  Lesson?   The  take-­‐away  from  this  case  is  that  courts  are  finally  beginning  to   scrutinize  the  problematic  mortgage  assignments  in  wrongful   foreclosure  cases.  This  ruling  may  also  affect  how  title  examiners  and   title  insurance  companies  analyze  the  risk  of  back  titles  with  potential   back-­‐dated  mortgage  assignments.  If  a  lender  records  a  true   confirmatory  assignment,  it  must  do  much  better  than  simply  state  an   effective  date.   __________________________________________________   Richard  D.  Vetstein,  Esq.  is  a  Massachusetts  real  estate  attorney  who   writes  frequently  about  new  foreclosure  issues  concerning  the  real   estate  industry.  He  can  be  reached  at  info@vetsteinlawgroup.com.