March 12, 2013
John Campbell has posted an abstract (and hopefully soon a draft) of Putting the ‘Trust’ in Trustees: An Examination of the Foreclosure Crisis and Suggestions for Reforming the Role of the Trustee. The draft itself proposes legislation for non-judiical foreclosure jurisdictions “that would make trustees real gatekeepers who require essential proofs, ask basic questions, and when factual disputes arise between the foreclosing party and the homeowner, refer those questions to courts.” (53) It is valuable to set forth some of the things that Campbell’s proposal would require from trustees:
- Proof of the transfer of the original note from the original lender to the current party who seeks to foreclose, including any and all intervening assignments. The foreclosing party should be required to produce a copy of the original note and attest in a sworn affidavit that the original note exists in its original form.
- Proof that the party who seeks to foreclose is the party who is recorded in the public records as the secured party, along with all the recordings that show how that party came to be secured.
- Detailed financial records that show when default occurred and precisely how much money the homeowner currently owes. (56)
Each of these items reflects a major controversy in the world of foreclosures. The first would ensconce the “Show Me the Note!” claim made by homeowners during foreclosure and bankruptcy proceedings in the statutory framework of non-judicial foreclosure regimes. The second would be a frontal assault on the role of MERS, requiring that the foreclosing party record in its own name its interest in the deed of trust. And the third would require that servicers provide adequate evidence to homeowners of the default. The proposal would effectively make non-judicial foreclosure a lot more like judicial foreclosure, an objective that I will not weigh in on today.| Permalink