Oklahoma High Court Means Business In Booting Back Foreclosure Judgments Based On Unindorsed Notes, Dubious Assignments, Lack Of Standing

Questions surrounding the use of unindorsed promissory notes and dubious assignments in foreclosure actions have recently led the Oklahoma Supreme Court to kick several cases back to the lower court for a closer look as to whether the foreclosing banksters had standing at the time they initially brought their lawsuits.

The following two excerpts, which appear in some of the cases, is generally representative of at least a part of the central problem that led the Oklahoma high court to give the banksters' cases the boot:

• Following the teachings of Deutsche Bank National Trust v. Brumbaugh, 2012 OK 3, ___ P.3d ____, ¶11, where we held:
  
  To commence a foreclosure action in Oklahoma, a plaintiff must demonstrate it has a right to enforce the note and, absent a showing of ownership, the plaintiff lacks standing. Gill v. First Nat. Bank & Trust Co. of Oklahoma City, 1945 OK 181, 159 P.2d 717. Being a person entitled to enforce the note is an essential requirement to initiate a foreclosure lawsuit. In the present case, there is a question of fact as to when Appellee became a holder, and thus, a person entitled to enforce the note. Therefore, summary judgment is not appropriate. If Deutsche Bank became a person entitled to enforce the note as either a holder or nonholder in possession who has the rights of a holder after the foreclosure action was filed, then the case may be dismissed without prejudice and the action may be re-filed in the name of the proper party. We reverse the granting of summary judgment by the trial court and remand back for further determinations as to when Appellee acquired its interest in the note.

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• It is a fundamental precept of the law to expect a foreclosing party to actually be in possession of its claimed interest in the note, and to have the proper supporting documentation in hand when filing suit, showing the history of the note, so that the defendant is duly apprised of the rights of the plaintiff. This is accomplished by showing the party is a holder of the instrument or a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument pursuant to 12A O.S. 2001, § 3-309 or 12A O.S. 2001, § 3-418.
  
  Likewise, for the homeowners, absent adjudication on the underlying indebtedness, the dismissal cannot cancel their obligation arising from an authenticated note, or insulate them from foreclosure proceedings based on proven delinquency. This Court's decision in no way releases or exonerates the debt owed by the defendants on this home. See, U.S. Bank National Association v. Kimball 27 A.3d 1087, 75 UCC Rep.Serv.2d 100, 2011 VT 81 (VT 2011); and Indymac Bank, F.S.B. v. Yano-Horoski, 78 A.D.3d 895, 912 N.Y.S.2d 239 (2010).

In each case, the high court remanded the matter back to the trial court for further determination as to if and when the bankster became a person entitled to enforce the promissory note.

For the rulings, see:

1. Ntex Realty, LP v. Tacker, 2012 OK 26 (April 3,2012);
2. BAC Home Loan Servicing, L.P. v. Swanson, 2012 OK 25, (April 3, 2012);
3. J.P. Morgan Chase Bank, N.A. v. Eldridge, 2012 OK 24, (March 6, 2012);
4. Bank Of America, NA v. Kabba, 2012 OK 23, (March 6, 2012);
5. CPT Asset Backed Certificates, Series 2004-EC1 v. Kham, 2012 OK 22, (March 6, 2012);
6. Deutsche Bank National Trust Company v. Richardson, 2012 OK 15, (February 28, 2012);
7. Deutsche Bank National Trust Company v. Matthews, 2012 OK 14, (February 28, 2012);
8. Deutsche Bank National Trust Company v. Byrams, 2012 OK 4, (January 17, 2012);
9. Deutsche Bank National Trust v. Brumbaugh, 2012 OK 3 (January 17, 2012).

See also, HSBC Bank USA v. Lyon, 2012 OK 10 (February 14, 2012) which, in affirming a summary judgment in favor of a foreclosing lender, the Oklahoma Supreme Court reinforces the proposition that, at least in Oklahoma, the only way to cure a foreclosure action where the foreclosing party cannot prove it was entitled to enforce the promissory note prior to filing the action is to dismiss the proceeding and then file an amended petition with the proper proof (ie. a properly indorsed note and a properly assigned mortgage attached thereto):

• In the present case, Appellee has presented evidence of an indorsed-in-blank note. Appellee must prove it is the holder of the note or the nonholder in possession who has the rights of a holder prior to the filing of the foreclosure proceeding.
  
  The trial court's actions have cured any deficiencies. The dismissal of the original action and the first Motion for Summary Judgment filed therein, and requiring the refiling of the second amended petition with the attached note demonstrating a proper indorsement, effectively cured any lack of standing in the initial filing. Thus, by the filing of the second amended petition with a properly indorsed note and a properly assigned mortgage attached thereto, HSBC has shown it was a person entitled to enforce the instrument as the holder of the note. 12A O.S. 2001 §3-301.