August 29, 2014
by James E. Clarke
Atlantic Law Group, LLC – USFN Member (Delaware)
Delaware Superior Court in E*Trade Bank v. Sanders (decided August 07, 2014) affirms the position that under Delaware contract law, a mortgage debtor lacks standing to challenge the assignment of mortgage, provided the assignment is properly executed. Under Delaware law, assignments of mortgage are effective upon proper execution, attested by one credible witness.
Last year in Citimortgage, Inc. v. Bishop (decided March 4, 2013), the superior court held similarly. E*Trade involved a series of assignments, including a MERS assignment. The court held that the assignments were properly executed and that the borrower debtor was without standing to challenge.
While many courts look to the note to determine standing, Delaware’s primary method of foreclosure, scire facias on mortgage, is a summary proceeding based on the recorded mortgage and/or assignments. The default is presumed by the complaint allegations and the burden of proof is upon the defendant to demonstrate under oath to the court why judgment of foreclosure should not be entered. Standing to foreclose is demonstrated by either an enforceable mortgage attached to the complaint or an enforceable mortgage along with a properly executed assignment.
Unlike other judicial actions, only the mortgagor, record owners if different, and persons with a legal or equitable interest are necessary defendants. Lienholders and tenants, however, are not necessary parties but receive mailed notice of the pending action as in many nonjudicial states. Likewise, a defendant’s permitted defenses are limited. Those defenses are payment or satisfaction of the debt, or avoidance. An avoidance defense must relate to the validity or illegality of the mortgage documents. Scire facias on mortgage derived from English Common Law and was originally codified by the Delaware Code of 1852.
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