US District Judge Amy Totenberg ruled that Georgia’s law means what its words say—that is, only the secured creditor (the rightful note holder) can foreclose without going to court. The key part of Georgia’s law is § 44-14-162, which governs non-judicial foreclosure, which is called “foreclosure under the power of sale”. The law says borrowers must receive notice before the foreclosure can happen, and not just any notice will do. Specifically, the “Notice of the initiation of proceedings to exercise a power of sale in a mortgage, security deed, or other lien contract shall be given to the debtor by the secured creditor no later than 30 days before the date of the proposed foreclosure….” (bold is mine; the language of the current statute is available through the Georgia Legislature’s website.)
In the case before Judge Totenberg, Ocwen Loan Servicing was trying to foreclose in its own name against borrower Michael L. Morgan. In ruling for Morgan, Judge Totenberg noted that perhaps Ocwen would have been ok if it had clearly stated it was acting as the agent for the secured creditor, and had named the creditor. She didn’t decide that issue in this case.
While that open question might seem like it has an obvious, pro-servicer answer, servicers shouldn’t assume it would be decided in their favor. That’s because of another part of the notice section, which reads:
“Such notice shall be in writing, shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor…” (bold is mine.)
In many situations, agents have limited authority. Unless the servicer has been given full authority to negotiate, amend and modify all the terms of the mortgage, Georgia law probably won’t let the servicer to non-judicially foreclose on behalf
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