Arizona Appellate Court Clears Up Confusion in Foreclosure Cases: Steinberger v OneWest

Basic fairness prevails in the Arizona Appellate Court’s new decision in Steinberger v. OneWest Bank, et. al.  Attorney Barbara Forde brought this action for her client Steinberger as a special action after the bulk of her case was dismissed by the trial court.  A special action can be brought when speediness is essential, and there is no other adequate form of relief.  Because she still had a few existing claims against certain defendants in her underlying case, she could not appeal by ordinary route, without waiting until the end of that case, which would be too late.  So she brought this special action.  And it sat and sat, much longer than the ordinary special action.  But the opinion was worth the wait.

Here’s the full opinion.

The case regarded pleading standards for a homeowner facing foreclosure.  The court was answering the question of whether there are any circumstances under which a person facing foreclosure may challenge the authority of the party seeking foreclosure?  If so, what are the requirements for the Forecloser to establish its authority?  Finally, if a lender offers to modify a loan, must it act reasonably in processing the modification?

The court does a good job of explaining the separate instruments of the note and deed of trust, and listing and describing the rights and responsibilities of the three entities involved in a deed of trust, the trustee, the trustor, and the beneficiary.

The court understood the problem of an assignment of an interest years after the interest has already been transferred.  If there is no interest to transfer, nothing transfers.  It’s as simple as that.

The court also does a good job of analyzing what the Arizona Supreme Court actually said in the oft-cited Hogan case.  The Hogan court did not say that one can never mention the authority of the beneficiary or the note holder in a lawsuit opposing foreclosure, or risk being swept into the dreaded “show me the note” category and summarily dismissed.  Rather, the Hogan court was concerned with the lack of affirmative allegations in the Hogan pleadings about how and why the beneficiary might lack authority, or might not be the beneficiary.

The Steinberger court also recognized that the point of listing securitization facts is to establish a timeline that may show that the transfers in a purported chain of title cannot be true, if the note was in fact transferred to a securitization trust by a set closing date.  This is relevant to the beneficiary’s claimed authority, not an attempt for the homeowner to be claiming rights or enforcement under the third party securitization documents.

Read the whole opinion; it is a worthwhile read.

Congratulations to my talented friend and colleague, attorney Barbara Forde.

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