Baughman v. Wells Fargo Bank

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Chevy Chase Bank foreclosed on property recorded in Melissa Kempton-Baughman’s name. Plaintiff and her husband apparently tried to work out a plan to cure the default in payments. The deed of trust identified the note, and it defined the bank as the lender, the Plaintiffs as the borrowers, and Mortgage Electronic Registration Systems, Inc. (“MERS”), as the beneficiary. MERS executed an “Assignment of Deed of Trust,” transferring to UBS Investment Bank the promissory note and the beneficial interest in the deed of trust. Pioneer Lenders Trustee Services, LLC, as successor trustee, recorded a “Notice of Default and Election to Sell Under Deed of Trust.” The notice stated, “The beneficial interest under said deed of trust and the obligations secured thereby is currently held by UBS Investment Bank.” Plaintiffs filed a voluntary petition under Chapter 7 of the Bankruptcy Code. In their petition, they listed Chevy Chase Bank as a secured creditor, and they stated that it had a lien on the property, that the lien was in foreclosure, that the secured debt exceeded the value of the property by $550,000, and that the property would be surrendered. On September 9, 2009, they received a discharge. They did not list UBS Investment Bank as a creditor. MERS executed an “Assignment of Deed of Trust,” transferring to UBS Investment Bank the promissory note and the beneficial interest in the deed of trust. The property was sold at a nonjudicial foreclosure sale to UBS Investment Bank, and the trustee’s deed was recorded on January 27, 2010. A year later, MERS executed an “Assignment of Deed of Trust” transferring to U.S. Bank, N.A., as trustee for the Trustee for Master Adjustable Rate Mortgage Trust Pass Through Certificates, Series 2007-3, all beneficial interest in the deed of trust. Pioneer Title Company, as successor trustee, recorded a notice of rescission, stating that the trustee had “been informed by the Beneficiary that the beneficiary wanted to rescind the Trustee’s Deed recorded upon the foreclosure sale which was conducted in error due to a failure to communicate timely, notice of conditions which would have warranted a cancellation of the foreclosure. US Bank contended that the sale was void because UBS Investment Bank was a nonentity. Plaintiffs then filed this action seeking quiet title to the real property and an injunction against any further attempts to foreclose on the deed of trust. Finding that the district court did not err in dismissing plaintiffs’ claim that the foreclosure was barred on a statute of limitations defense, the Idaho Supreme Court affirmed. View "Baughman v. Wells Fargo Bank" on Justia Law