Show me the note!
In Hogan v. Washington Mutual Bank, the Court of Appeals ruled that Arizona’s “non-judicial foreclosure statute does not require presentation of the original note before commencing foreclosure proceedings.” In Hogan, the original bank, Long Beach Mortgage, transferred the loan to Washington Mutual. Washington Mutual noticed a non-judicial foreclosure trustee’s sale after Hogan stopped making payments. Washington Mutual failed, the FDIC stepped in as the Receiver and its assets were transferred to Chase Bank. Chase Bank proceeded with the foreclosure of Hogan’s home. Hogan filed a lawsuit to try to stop the foreclosure arguing that either Chase or Washington Mutual had to come forward with the original promissory note. Both the trial court and the Court of Appeals disagreed and rejected the “show me the note” argument. The Hogan decision essentially disregarded well respected decades old negotiable instruments law that ties promissory notes to deeds of trust. While this is a non-binding decision on other courts, the trend seems to be moving in favor of the banks.
So, what does this mean for you? The scariest part of the Hogan decision is that if court’s line of reasoning is continued to be followed by Arizona courts and the legislature does not intervene, any bank could theoretically record a notice of trustee’s sale, even if it does not really own the loan, and start the foreclosure.
In addition, the full impact of this ruling is not really known. Does the Hogan decision mean that the next time that you take out a home loan that you will not have to sign a promissory note? Because notes still mean something, a note will still be required despite the Hogan decision. And what if one lender receives an assignment of the note and another lender an assignment of the deed of trust?
At Hymson Goldstein & Pantiliat, PLLC we are here to help you navigate through these legal pitfalls. If you are facing foreclosure, are contemplating short selling your home, contemplating transferring your home to your lender, or are being pursued by a bank for a deficiency, we can advise you on your rights and offer strong legal representation to assist in protecting you.
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