Show-me-the-note is now a recognized defense for Arizona homeowners facing foreclosure, decided the Arizona Court of Appeals on January 30, 2014 in Steinberger v. McVey. The show-me-the-note mortgage foreclosure defense alleges that, despite the borrower being in default on the loan, the foreclosing party is neither the beneficiary nor the trustee of the deed of trust, and thus cannot invoke the deed of trust’s power of sale clause. Steinberger builds off of Hogan v. Washington Mutual Bank, which held that a deed of trust, like a mortgage, may be enforced only by, or on behalf of, a person who is entitled to enforce the obligation the mortgage secures. Under Steinberger, a lawsuit challenging the authority of the party seeking foreclosure will survive summary judgment when the borrower (1) affirmatively alleges that the trustee(s) lack authority and (2) obtains a Temporary Restraining Order (TRO) or injunction prior to the trustee’s sale.
In Steinberger, the original deed of trust named the trustee as Chicago Title Insurance Company and named MERS as the beneficiary and nominal record holder of the deed on behalf of IndyMac and its successors and assigns. The deed of trust was assigned by Roger Stotts in his capacity as vice president for MERS on February 13, 2009. The document was not witnessed and notarized until March 23, 2009. Steinberger alleged this assignment was invalid for several reasons: Roger Stotts was employed by IndyMac Federal, not MERS, at the time of the assignment and thus lacked the authority to assign the deed on behalf of MERS, the notary did not personally witness the assignment, and the purported assignment was to a non-existent entity (IndyMac Federal had been liquidated and its assets sold to OneWest on March 19, 2009). Steinberger also challenged the validity of a subsequent assignment of the deed of trust.
It is important to note that, under Steinberger’s holding, the show-me-the-note defense requires that the borrower allege with specificity the facts which show that the trustee lacks authority to conduct the trustee sale. Discovering these facts is a difficult, time-consuming process that often provides the necessary justification for receiving a Temporary Restraining Order on the trustee sale.
“Your Hometown Law Firm” asks that homeowners in the greater Prescott community who are behind on their mortgage payments respond quickly and adequately to bank mail, such as Foreclosure Notices. If you do find yourself facing foreclosure, call the Prescott Law Group at (928) 445-1909 for aggressive, knowledgeable representation.