AZ: TRUSTEE CAN BE SUED IF SUBSTITUTION WAS INVALID

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COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

JUDGES ARE STARTING TO EXAMINE DOCUMENTS

AND THEY DON’T LIKE WHAT THEY ARE SEEING

“Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as trustee has not been legally appointed as trustee, this statute would not come into play.”

BOTTOM LINE: IF THE SUBSTITUTION OF TRUSTEE WAS INVALID FOR ANY REASON, THERE CAN BE NO FORECLOSURE.

SEE why-the-bankers-will-lose-and-go-to-jail

Here is a quote from an order entered recently that says it all:

“Defendant Quality Loan Service Corp. (“Quality”) has filed a Motion to Dismiss, or in the alternative, a Motion for Summary Judgment arguing that Counts 1-6 do not state a claim for relief against it, as trustee. In support, Defendant Quality has attached a recorded Substitution of Trustee. The Court is puzzled by this document because it is signed by an officer of Defendant Quality, as agent for One West Bank, FSB yet (1) there is no evidence of such an agency, (2) there is no evidence linking One West Bank, FSB to MILA, Inc., the entity from which Plaintiff obtained the original loan, and (3) the Plaintiff has alleged a break in the chain of title regarding the loan and Defendant Quality as Trustee, which the Court must accept as true. Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as trustee has not been legally appointed as trustee, this statute would not come into play. Taking the allegations of the Complaint as true, causes of actions have been alleged by Plaintiff against Defendant Quality in Count 2 (alleging that Defendant Quality was not appointed as trustee by an entity in the chain of title to the underlying note/deed of trust), Count 3 (alleging that the document appointing Defendant Quality as trustee is false or forged), and Count 5 (allege fraud in the appointment of Defendant Quality as trustee), and Count 6 (alleging statutory and contractual violations in Defendant Quality’s notice of the trustee sale). The Court finds that there are no allegations against Defendant Quality stated in Counts 1 or 4. Therefore,
IT IS ORDERED granting Defendant Quality Loan Service Corp.’s Motion to Dismiss as to Counts 1 and 4 only, with prejudice, and denying the Motion as to Counts 2, 3, 5, and 6.”

12 Responses

  1. […] Substituted Arizona Trustee Does Not Have to Be Dismissed According to Living Lies, this was a recent Arizona order.  The court denied a motion to dismiss the sale trustee (in AZ, a […]

  2. Here is a way to challenge the servicer’s attempt to assert itself as the secured party and to cover up the purported beneficial owner’s actual lack of interest:
    http://bryllaw.blogspot.com/2011/07/way-to-attack-servicers-and-their.html

  3. @johngault – it’s not that simple. If Bank X, based in Minnesota, hires me to do a foreclosure on property in Alabama and claims that they are the holder of a note and provides a copy of that note either specifically endorsed to them or endorsed in blank, I’m entitled to rely on that. I don’t think I’m obligated to travel to Minnesota and look in their vault for the original note. An atty is entitled to rely upon the assertions of his client. If he becomes convinced the client is not telling the truth, then he needs to investigate further and/or withdraw.

  4. The trustees should be demanding evidence of the ‘beneficiary’s’ right to foreclose. Nevada issued an order against Quality Loan Services, finding that QLS operated as an unlicensed debt collector.
    Anyone know the status of that?
    It’s such a relief to finally see courts apply the law. This is a great ruling.
    Thanks for posting it, Mr G.

  5. “BOTTOM LINE: IF THE SUBSTITUTION OF TRUSTEE WAS INVALID FOR ANY REASON, THERE CAN BE NO FORECLOSURE.” – so they correct the substitution or amend it and start over…

  6. “No evidence linking” would be different from hearsay in that it implies the complete lack of evidence. Hearsay would be evidence that may or may not be admissible for various reasons.

    I’ve only been exposed to practice in a smaller region, but I haven’t seen rampant fraud and forgery on the part of the trustees as much as this site suggests. By and large the foreclosures in my area are performed by competent attys, with a few of the foreclosure mills thrown in to the mix. In fact, the mills often seem to offer better work product than the “occasionals” since they have more experience with the practice.

    With that said, if the underlying mortgage obligation has defects, or if there are issues at the servicer level, then it is fairly easy to hide those from the trustee. The trustee only knows what he’s told by the client and what he can discover through his own research.

  7. Marie,
    The trustees are NOT escaping attention! Our WA state AG, McKenna, has them in his sites. He has sent out letters demanding those trustees who do NOT have a local connection that they either need to get one, or discontinue business in WA state.

    Also, McKenna also was the only AG to bring in the trustees to the 50 state investigation. He has been doing a great job to include them, as there are many violations of WA state law that the trustees have been violating!

  8. So, is “no evidence linking” the same as “hearsay”?

  9. […] 8 Jul MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE JUDGES ARE STARTING TO EXAMINE DOCUMENTS AND THEY DON'T LIKE WHAT THEY ARE SEEING "Thus, while A.R.S. §33-807(E) may operate to dismiss a trustee in certain instances, if one of the allegations of a complaint is that the entity purporting to act as trustee has not been legally appointed as trustee, this statute would not come into play." BOTTOM LINE: IF THE SUBSTITUTIO … Read More […]

  10. What order? From what case? Please cite case. Thank you.

  11. Now we’re talking Always wondered how these trustees escaped attention

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