Great question and it means that you have already done some excellent due diligence as a homeowner. Following the financial crisis that began in 2008, more and more people learned that certain banks failed to properly convey the promissory not and mortgage in a private-lable mortgage security (MBS) trust according to the Pooling & Servicing Agreement (PSA). This has given rise to savvy foreclosure defense attorneys to challenge foreclosure complaint base upon Lack of Standing.
I just had a federal foreclosure case dismissed by Judge Pallmeyer on October 11, 2011. As a nationally recognized leader in Mortgage Foreclosure Defense Education & Litigation, I successfully defeated Plaintiff Complaint by filing A Motion to Dismiss for lack of standing. See Deutsche Bank v. Bodzianowski (11 cv 1950)
Judge Pallmeyer ruled that Deutsche, a major Wall Street bank, lacked standing to foreclosure on an Illinois homeowner. Standing is the threshold question in every federal case. Plaintiff was NOT the original lender and sought to establish standing by endorsing the Promissory Note and assigning the Mortgage directly to the Trustee . While Plaintiff pled that it was the legal holder of the Note and Mortgage, it failed to convey the mortgage file according to the terms creating Trust (Pooling and Servicing Agreement - PSA) and New York trust law. A Promissory Note is an asset of the trust and should have an "unbroken" chain of endorsements from the Originator (original lender) to Sponsor to Seller to Depositor and then to the Trustee, sequentially. In other words, the act of the Trustee receiving an instrument that does not have ALL of the intervening endorsements is void. Although Plaintiff argued that it has standing because the Promissory Note, a negotiable instrument, is governed by the Uniform Commercial. However, the UCC permits parties to agree to a more exacting method of transferring the notes to the trust and in this case the parties did so.
As always, individual cases may and will vary.
Standing is the legal term used to describe the party who has a right to file a lawsuit or make a particular legal claim. Only a person or entity that has suffered actual injury has standing to seek redress in court.
Lack of standing is a common defense in foreclosure cases. However, in Illinois courts, that argument does not often carry the day. In addition, proving lack of standing can be an expensive proposition. Courts often allow plaintiffs great latitude to amend their complaints, if the named plaintiff is determined to lack standings.
I hope this helps.
Steven A. Leahy
Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.