AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• In 2006, the Borrowers executed a promissory note for $250,000, secured by a mortgage on their property. Initially, the note was payable to Plaza Home Mortgage, then indorsed to IndyMac Bank F.S.B., and subsequently indorsed in blank. The mortgage was assigned to Deutsche Bank on September 13, 2010. The Borrowers defaulted on the note, leading Deutsche Bank to initiate foreclosure proceedings on September 27, 2010 (paras 2-3).

Procedural History

• Appeal from the District Court of Santa Fe County, Sarah M. Singleton, District Judge, March 4, 2015.

Parties' Submissions

• Appellee (Deutsche Bank): Argued that it was the holder of the note and mortgage, entitled to foreclose on the Borrowers' property, asserting possession of the note indorsed in blank and the assignment of the mortgage as evidence of its standing (para 2).
• Appellants (Borrowers): Contended that Deutsche Bank did not validly hold their note and mortgage prior to initiating foreclosure proceedings, arguing the mortgage was transferred in violation of the pooling and servicing agreement (PSA) governing the trust, rendering the transfer void. They supported their argument with an affidavit from an expert in the mortgage banking industry, although they did not attach a copy of the PSA to their motion (paras 3-4).

Legal Issues

• Whether Deutsche Bank had standing to foreclose on the Borrowers' property given the alleged violation of the pooling and servicing agreement (PSA) governing the trust into which the mortgage was assigned (para 1).
• Whether the Borrowers, as neither parties to nor third-party beneficiaries of the PSA, can challenge alleged violations of the PSA (para 9).

Disposition

• The Court of Appeals affirmed the district court's order granting Deutsche Bank's motion for summary judgment in the foreclosure action (para 14).

Reasons

• The Court, per Judge Cynthia A. Fry, with Chief Judge Michael E. Vigil and Judge Jonathan B. Sutin concurring, held that the Borrowers could not challenge the alleged violations of the PSA because they were neither parties to nor third-party beneficiaries of the PSA. The Court distinguished the present case from the Bank of New York v. Romero decision, noting that Deutsche Bank's possession of the note indorsed in blank established it as the holder, at least in terms of the issue presented in Romero. The Court also rejected the Borrowers' reliance on cases suggesting that assignments in contravention of a PSA are void, noting that these cases are anomalies and have been criticized for their interpretation of New York trust law. The Court concluded that the Borrowers failed to raise a genuine issue of material fact as to whether Deutsche Bank was the proper party to foreclose, given the judicial consensus regarding a mortgagor’s lack of authority to challenge the transfer of loan documents that allegedly violate a PSA (paras 5-13).