Homeowners finally got a victory in a local mortgage foreclosure case. More specifically, they successfully challenged the standing of a bank’s foreclosure action, in Green Tree Loan Servicing, LLC v. Allen. In its complaint, the plaintiff failed to allege it was the holder of the note. The defendants did not deny that they were in default of the mortgage. However, they aggressively disputed that the bank was the holder of the note, as well as the credibility of the bank’s loan witness at trial on the default. Plaintiff incorrectly assumed that just because the defendants admitted there was a default then it was entitled to an in rem judgment. The judge found for the defendants who correctly argued that a bank needs to hold the mortgage and the note when it files its complaint in order to satisfy Pennsylvania standing requirement.
The judge stated that, “it is no small matter for foreclosed upon debtors to desire an assurance that the proceeds from the forced sale of their properties will be remunerated to the creditors on their loan obligations, and that no second action will be filed against them thereafter. It is in the interest of simple justice and fairness that the courts must assure that this is provided to them in order for this population to heal and to move on from what still remains a largely unmitigated economic disaster.” What the judge failed to mention is how absurd it seems that we should trust the banks not to sue homeowners twice, when it was these very banks who created this “economic disaster” in the first place.