May 7, 2013
by Steven E. Zablocki
Gray & Associates, L.L.P. – USFN Member (Wisconsin)
Recently, two favorable decisions have been issued by the Wisconsin Court of Appeals. The decisions are unpublished and, therefore, of limited precedential value. However, they do show a decided shift in favor of lenders. Discussed in this article is the case of Household Finance v. Kennedy, 2011AP2658 (Wis. Ct. App. Mar. 5, 2013). The other case, CitiMortgage v. Hobach, 2012AP1462-FT (Wis. Ct. App. Feb. 13, 2013), was summarized last month in the April USFN e–Update. If you missed that article, you can view it here.
In Household Finance v. Kennedy, the defendants appealed an order denying a motion to vacate a foreclosure judgment. The initial judgment was granted by stipulation. Later during the redemption period, the defendants reviewed their mortgage documents and noticed “irregularities” in the documents attached to the complaint. The defendants alleged that because of these “irregularities” the plaintiff, Household, was not the holder in due course or the real party in interest. The defendants moved to stay the sale. The court deferred the motion and indicated that the issue could be dealt with at the confirmation hearing. The defendant could conduct informal post-judgment discovery.
Prior to the confirmation hearing, the defendants viewed the original note. At the confirmation hearing the court confirmed the sale. The court indicated that the defendants had the opportunity to review the original note and there was nothing in the record to suggest the note was ever assigned to a third party.
Thereafter, the defendants moved to vacate the judgment, alleging that the documents were the result of “robo-signers” and concealment was undertaken to hide the true beneficial owner. After a hearing, the court determined that no new evidence was submitted and denied the motion. That decision was affirmed on appeal, where the court of appeals agreed that no new evidence was submitted and the defendants’ challenges were appropriately denied.
The court had little patience for a defense predicated on standing, but willfully ignorant of facts. The defendants reviewed the original note in possession of the plaintiff. It was duly endorsed. This decision underscores the need to sometimes produce the original note, even post-judgment. While an original document is not required in Wisconsin, a court when presented with original properly-endorsed documents will concede standing in the lender’s favor.
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