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Indemnification Is Not Enough!

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A common form of indemnification comes when a foreclosure is filed based upon a “lost” note. The forecloser promises to pay you if someone else shows up with the note or, presumably, ownership of the debt. I remember getting a few of those cases from Taylor Bean and Whittaker back in 2008 — you remember them, don’t you? They went to jail. I rejected their indemnification because it was apparent to my eye, trained in securities analysis, that I would have been just as well off and maybe better if I received a promise from a squirrel to give me some nuts next winter. They declared bankruptcy literally 3 days after the attorneys “man to man” assured me it was a good offer of indemnification.

Tonight join Charles Marshall and Bill Paatalo as they discuss some facets of indemnification about which the average lay person neither knows or cares — until it means saving their home.

Indemnification of mortgages is a topic which is implicated when homeowners seek to refinance or sell their homes or the mortgage notes associated with their homes. Indemnification happens when one party tells another party: I will indemnify you from harm, meaning I will carry the weight of any legal consequences, and if you get an unfavorable legal consequence, such as an adverse Court ruling or judgment, I will in effect pick up the tab, and see that you are held harmless.

Securitizers of mortgages and their servicers and auction sale trustees often make it sound as if the hypothetical of another party trying to enforce their sketchy mortgage notes is just a misplaced notion, and that in any case they would argue (particularly in court proceedings or the pleadings related to same), they the institutional trust or servicer could or would indemnify borrowers from a random third-party coming onto the scene to try and collect on the note.

Discussing a California appeal case today shooting down that whole scenario, showing how indemnification may not be enough in these situations.

4 Responses

  1. @ ALL

    Huckell v. Matranga (1979) 99 Cal. App. 3d 471

  2. @ Mr. NGarfield

    Please consider discussion of the following published case re void assignment, to wit:

    Certified for Publication 5/9/18 (order attached)

    Hacker v. Homeward Residential, Inc. 4/10/18 CA2/1

    “…for claims arising from an allegedly void assignment of the deed of trust (DOT) on real property located at 1713-1717 Stearns Drive in Los Angeles, California (the property), and a failed short sale agreement. The trial court sustained the demurrer by Homeward, Deutsche Bank, Western Progressive, Ocwen, Wells Fargo, Power Default, Brandy Berns, and Vicki Pospisil to all causes of action; and the court sustained the demurrer by Sand Canyon to the third through eighth causes of action.

    The trial court also denied Hacker’s request for leave to amend. On appeal, he contends he can amend his pleading to allege causes of action for wrongful foreclosure, fraud, slander of title, declaratory relief, unfair business practices, and cancellation of instruments against Homeward, Deutsche Bank, Western Progressive, Ocwen, Wells Fargo, Power Default, Brandy Berns, Vicki Pospisil, and Sand Canyon.1

    We find that the trial court abused its discretion in denying leave to amend. We therefore reverse.”

    “Hacker’s factual allegations mirror those of the plaintiff in Sciarratta. Hacker contends Option One sold all beneficial interest in the property when it sold the mortgage to the Option One Trust pursuant to the PSA on June 1, 2006. Two years later, on August 21, 2008, AHMSI, as successor in interest to Option One, executed an assignment of the DOT to Soundview Trust, with Deutsche Bank as trustee. Hacker contends this assignment was void because AHMSI had no legal authority to convey an interest in property that it had already sold to the Option One Trust.”

    “We find that Hacker has successfully alleged facts supporting a claim that the August 21, 2008 assignment is void. As such, he has standing to pursue an action for wrongful foreclosure.”

    “Here, we conclude that Hacker has standing to pursue his claim for wrongful foreclosure. It follows that Hacker also has standing to pursue the remaining claims that derive from his action for wrongful foreclosure. (Glaski v. Bank of America, National Association (2013) 218 Cal.App.4th 1079, 1101.)”

  3. @ Mr. NGarfield

    Please post the case, or a link thereto, regardless of whether it is published or not.

  4. Great topic. Please include — does indemnification mean that the proper party does not have to be named in court??

    Thanks —

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