Editor: David Reiss
Brooklyn Law School

March 20, 2013

Texas District Court Found that Bank Had Standing because it had Promissory Note and Affidavit

By Gloria Liu

In Santarose v. Aurora Bank FSB, No. H-10-0720 (S.D. Texas 2010), homeowners alleged wrongful foreclosure. The homeowner executed a promissory note in connection with a purchase money loan from Lehman Brothers Bank. The homeowners executed a deed of trust securing the payment of the Note. Homeowners assert that Aurora did not possess the original promissory note and therefore had no evidence that it loaned them any money. In addition, the Deed of Trust is a contract that homeowners have with themselves and can change at any time. Homeowners also asserted that MERS did not have standing to conduct the foreclosure. The court found that Aurora produced the original promissory note in open court and also submitted an affidavit attesting that Aurora/Lehman has been the sole owner of the Note since the inception of the loan. The Note lists Lehman Bank, Aurora’s predecessor in interest, as the “Lender” and defines “Note Holder” as “[t]he Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note . . ..” Therefore, the court held that there was no factual basis for homeowner’s suspicion that Aurora did not have the original promissory note as evidence of its loan to the homeowners.

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