A Standing Question: Mortgages, Assignment, and Foreclosure

Abstract

This Article examines the judicial treatment of mortgage assignments across various jurisdictions in the foreclosure context. Although some courts do permit debtors to challenge suspicious or problematic assignments, most have ignored such problems and denied standing to debtors attempting to assert assignment-based defenses. This is particularly surprising given the widespread and well-documented problems with foreclosure “robo-litigation,” including backdated documents, fraudulent notarizations, and unauthorized signatures. Despite the abuse of process by foreclosing entities, courts have permitted foreclosures to continue unabated and, in some instances, have even precluded the possibility of discovery to debtors seeking to ensure that title and assignments are legally valid. Judicial ambivalence about formal compliance by mortgage assignors and assignees in the foreclosure context is somewhat ironic given most courts’ routine enforcement of instruments against debtors who do not formally comply with all contractual terms. Current adjudicative approaches to mortgage assignment are seemingly disconnected from the devastating reality of the home mortgage crisis and its causes. Moreover, there are several rationales that would support a more robust enforcement of technical compliance with assignment procedures, including the need for procedural equity, title certainty, and public records integrity. Thus, as evidence exists that banks are still making many of the same problematic mistakes regarding transfer documentation, courts can perform an essential monitoring role as an important spur towards reform. Although it would not address all of the underlying causes of the housing crisis, an adjudicative approach that liberally permits challenges to mortgage assignments would encourage lenders and servicers to be more circumspect in their foreclosure processes.

Keywords: mortgage, foreclosure, assignment, standing, home loan, lender, borrower, robo-litigation, procedure