January 21, 2011, Prince William County, Virginia
Yeah, I know... You are thinking, What standing? Isn't Virginia a nonjudicial foreclosure state?
Well, the twist in this case was a self-created could on the title that Aurora sought to remove prior to its contemplated foreclosure. Aurora sought this by affirmatively
coming to court as a plaintiff
. The homeowner had previously recorded a release of the subject lien based on her reading of TILA and on some "advice" over the internet.
Even though there may have been some colorable basis in the law for the homeowner's position (TILA provides that upon consumer's rescission, the security interest becomes void and creditor must take steps to effectuate rescission or bring a declaratory judgment action), I had at least two Virginia judges (one federal and one state) tell me that the homeowner's conduct of recording a release here borders on criminal fraud warranting referral to the state prosecutor.
But be that as it may, Aurora sought to have the homeowner's recordings removed from the chain of title and, to do that, it had to show.... standing
. It had to show that it itself
had any interest in the property before it could ask for any "relief" with respect to the property.
Aurora's claim to the property was based on a promissory note not payable to it, but endorsed in blank and supposedly acquired by it after the loan's origination. We challenged Aurora's position and held Aurora to its burden to plead and prove its case to the full extent of the law.
You won't believe what happened next. The judge, having heard the arguments and having asked very pointed and crucial questions (I've been in front of him before and he is a very solid and fair judge, one of those who we say "follows the law"), sided with Aurora and denied (overruled) our demurrer (motion to dismiss)!
Then we proceeded to the merits. During that time, I asked the court to "clarify" what interest it found on the part of Aurora and where it stemmed from, given that Aurora failed to plead all the necessary elements in its case with respect to the promissory note. The judge immediately realized that it was "reversible error" and that he would have to reverse himself and rule for us (albeit reluctantly). He stated something like, "I hate to do this, I hate to do this, but we gotta do it right." And then he reversed himself on the spot in our favor and justified his own ruling by stating that it would not
be a favor to Aurora either
if he issued an order in the case that was appealable and that was likely to be reversed later.
In some matters, whatever the judge's personal preference, his hands are tied by the law! This is what makes the judiciary branch of government different from any other branch. You better pray that America remains the land governed by the rule of law. Neither the king to the bank is above the law!
What this case tells us is that, as homeowners, people are facing a tremendous policy
hurdle (and even prejudice
) to overcome in every court when trying to challenge a bank's right to take one's house without proper (due) process. This judge basically thought my client was a deadbeat who's trying to get out of a justly imposed obligation. If you are a homeowner, your arguments must be air-tight
, so that anything done in derogation of your position would be "reversible error."
Also, it doesn't hurt to briefly address the policy concerns and tell the judge that you as a borrower were duped at closing with false promises of never-ending rising
home values and quick refinances available at anyone's whim. A bunch of sharks concocted your loan with utter disregard of your ability to repay and without putting any of their own funds at risk.
So there you have it. Aurora does not have standing to mess with the chain of title!