A must read by Michael Patrick Rooney, Esq., California wrongful foreclosure attorney.
Everyone in America has heard of Robosigners by now. But somehow, in a majority of states (the 27 non judicial foreclosure states), qualms exist about whether this practice is "okay" simply because the matter does not go to court. The clear answer, despite what the banks have said, is no --- absolutely not.
Because the topic has not gotten the treatment it deserves, I will gladly do the job. The following are by no means a complete list, but are the most clear LEGAL reasons (setting aside pure moral questions and the U.S. Constitution) that the Robo-Signer Controversy will entitle hundreds of thousands of homeowners wrongfully foreclosed and evicted to sue in non judicial foreclosure states. Briefly, Robo Signers are illegal in California because fraud cannot be the basis of clear title, trustee's deeds following Robo Signed sales are void as a matter of law, notarization is a recording requirement for many of the documents, which we also know was often botched, and most importantly because robo signed falsifications ARE meant for use in court, including unlawful detainers and bankruptcy matters.
1. Clear Title May Not Derive From A Fraud (including a bona fide purchaser for value).
In the case of a fraudulent transaction California law is settled. The Court in Trout v. Trout, (1934), 220 Cal. 652 at 656 made as much plain:
"Numerous authorities have established the rule that an instrument wholly void, such as an undelivered deed, a forged instrument, or a deed in blank, cannot be made the foundation of a good title, even under the equitable doctrine of bona fide purchase. Consequently, the fact that defendant Archer acted in good faith in dealing with persons who apparently held legal title, is not in itself sufficient basis for relief." (Emphasis added, internal citations omitted).
This sentiment was clearly echoed in 6 Angels, Inc. v. Stuart-Wright Mortgage, Inc. (2001) 85 Cal.App.4th 1279 at 1286 where the Court stated:
"It is the general rule that courts have power to vacate a foreclosure sale where there has been fraud in the procurement of the foreclosure decree or where the sale has been improperly, unfairly or unlawfully conducted, or is tainted by fraud, or where there has been such a mistake that to allow it to stand would be inequitable to purchaser and parties." (Emphasis added).
Hence, if forged Robo Signed signatures are used to obtain the foreclosure, it CERTAINLY makes a difference in California and other non-judicial foreclosure states.
2. Any apparent sale based on Robosigned documents is void - without any legal effect - like Monopoly Money.
In Bank of America v. LaJolla Group II, the California Court of Appeals held that if a trustee is not contractually empowered under the Deed of Trust to hold a sale, it is totally void. Voidness, as opposed to voidability, means that it is without legal effect to begin with. Title does not transfer. No right to evict arises. The property is not sold.
In turn, California Civil COde 2934a requires that the beneficiary execute and notarize and record a substitution for a valid substitution of trustee to take effect. Thus, if the Assignment of Deed of Trust is robo-signed, the sale is void. If the substitution of trustee is robo-signed, the sale is void. If the Notice of Default is Robo-Signed, the sale is void.
3. These documents are not recordable without good notarization.
In California, the reason these documents are notarized in the first place is because otherwise they will not be accepted by the County recorder. Moreover, a notary who helps commit real estate fraud is liable for $25,000 per offense.
Once the document is recorded, however, it is entitled to a "presumption of validity", which is what spurned the falsification trend in the first place. Civil Code section 2924. Therefore, the notarization of a false signature not only constitutes fraud, but is every bit intended as part of a larger conspiracy to commit fraud on the court.
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