Posted by Karen Pooley, HomeownersSuperPAC, WA Director
WASHINGTON BANKER’S ASSOCIATION ATTEMPTS TO OVERTURN TWO WASHINGTON SUPREME COURT DECISIONS!
This is the Washington Homeowners’ alert to the Washington Bankers Association’s attempt to overturn two Washington Supreme Court decisions: Lyons v. U.S. Bank (2014) and Bain v. Metropolitan Mortgage (2012) with the introduction of Senate Bill 5968, a Pro-Banker Bill.
Both of these Washington Supreme Court cases held that the foreclosing entity must be the owner of the obligation evidencing the debt (or the promissory note) yet the Pro-Banker Bill, Senate Bill 5968, would allow lenders to foreclose on property in the state of Washington without clear ownership of the underlying debt!
This is a historically memorable moment for the Washington Legislature to even introduce a bill that would allow corporate entities the ability to lawfully steal private property in the State of Washington, when since 2009 there have been approximately a quarter of a million Washingtonians potentially unlawfully foreclosed upon.
During the testimony in favor of yet another Pro-Banker Bill, the Washington Land Title Association spokesman, Attorney Stuart Halsan, testified that:
“…if you start requiring the original note that has been gone through, I don’t know how many hands, but the collection is being done by a servicing company that we know of. If you require that original note, none of you will ever be able to sell your property ever! You just won’t. And that is my weak understanding of this thing…” [DC Editor: That’s likely because the loans were rehypothecated collateral and some may have even been lost altogether.]
It is clear with this most recent Pro-Banker Bill, SB 5968, the Washington Banker’s Association are hiding the fact that most of the original documents evidencing the debt are missing, some claim they have been intentionally destroyed.
What feeds flame to this fire is that during this session, the Washington Homeowners were told that there was “not enough interest in the subject matter of foreclosure” to re-introduce four Pro-Homeowner Bills that would protect the Washington land records and therefore protect land ownership in the state of Washington, even though last month four hundred Washingtonians received a notice of default (the first step in the foreclosure process in Washington State). Rep. Zack Hudgins introduced these four Pro-Homeowner Bills, HB 2656, HB 2657, HB 2658 and HB 2659 into last session, but has yet to re-introduce them this session.
Below are the four Washington Pro-Homeowner bills not yet re-introduced:
This bill is requesting only the change of one word. From “shall” to “may”. This bill will allow the courts to apply discretion regarding the bond requirement to restrain a trustee’s sale under the Deed of Trust Act. Currently, the Deed of Trust Act is unclear on whether the requirement of the homeowner to pay into the court registry a significant bond payment every month is mandatory.
RCW 61.24.130(1) states:
“The Court shall require as a condition of granting the restraining order or injunction that the applicant pay to the clerk of the court sums that would be due on the secured obligation secured by the deed of trust if the deed of trust was not being foreclosed.
Yet, the very next section of the statute RCW 61.24.140(1)(b) ambiguously states:
“In addition, the court may condition granting the restraining order or injunction upon the giving of security by the applicant in such form and amount as the court deems proper.”
Many of the cases currently being challenged in the Washington State Superior and Federal Courts are asking the same question: “Who is the true and lawful beneficiary of my Deed of Trust?” Why should Washington Homeowners have to “buy justice” and pay the court for the ability to prosecute wrongful and unlawful entities attempting to obtain their home without the proper authority?
The title industries “dirty little secret” is that they are exempting from all title policies any title issues that arise from assignments and transfers that are not publicly recorded. Because Washington State currently does not mandate recording of assignments, what results is that there are plenty of unrecorded assignments which are not covered by any title insurance policy.
Yet, real estate professionals tell their clients all the time that title insurance is their security to clear and marketable title, even though it is not. In addition, now the lenders in Washington have included a “MERS Rider” to the deeds of trust in Washington State. This MERS Rider could throw many new deeds of trust in limbo because it is entering the “Note” into the 4 corners of the deed of trust contract, possibly invalidating the deed of trust contract.
The Washington Supreme Court just ruled that there is no private cause of action for violations of the Deed of Trust Act when they decided Frias v. Asset Foreclosure Services. That means that the trustees of this state need not follow and obey the Deed of Trust Act, because they really can’t be held accountable in a court of law. The violations have to rise to the level of a Consumer Protection Act violation for homeowners to get their day in court. We must mandate that the trustees are lawful in Washington. If the trustees do not obey the law, there must be monetary penalties for the violations of law they commit.
The only requirement the banks need to unlawfully foreclose in the state of Washington is a document entitled “Beneficiary Declaration.” The banks must sign this document under penalty of perjury that they are the holder of the note. So, the banks can wrongfully declare, “We are the holder of the promissory note,” and Washington homeowners must believe them. Because banks don’t lie, do they? The purported lender doesn’t have to produce any original documents to foreclose on a home in the state of Washington.
Homeowner advocates have submitted blatantly false beneficiary declarations to both Attorney General McKenna and Attorney General Ferguson. McKenna’s administration stated that without a monetary penalty associated with the infraction, the state could not act. Without a substantial monetary penalty, the trustees will not stop conducting unlawful foreclosures. In Washington State, if you get caught stealing a car you will be charged with a felony, yet if you get caught stealing a house, you will be charged with perjury. Perjury is the least prosecuted and hardest to prove crime across the nation.
“It is hard to believe if you steal a car in Washington, you go to prison, but if you steal a house, you still are welcomed to the Governor’s Ball.”
During last year’s legislative session, the Judiciary Committee in the House would not give these Pro-Homeowner Bills a public hearing, even though many homeowners wrote in requesting to speak on these bills. This session, the Washington Homeowners were told that unless we could find five House Republicans to publicly sign on in support of the four bills, they would not be re-introduced into this session. Of course, even though the Republicans mantra is the protection of property rights, the Washington Homeowners were unable to achieve any Republican support to protect land ownership in Washington State.
Yet, the bankers seemed to be able to get their bill introduced this session with ease. A bill that would allow lenders to steal homes in Washington State was ushered into the Senate hopper. This bill would make stealing homes not only okay, but actually lawful.
One of the Senate sponsors of SB 5968, Senator Mark Mullet, is a former executive for Bank of America.
The Supreme Court held in Cox v. Helenius (1985) that Washington’s Deed of Trust Act should be construed to further three basic objectives:
- That the non-judicial foreclosure process should remain efficient and inexpensive.
- That the non-judicial foreclosure process should provide an adequate opportunity for interested parties to prevent wrongful foreclosure.
- That the non-judicial foreclosure process should promote the stability of land titles.
The actual consequences of the Washington Deed of Trust Act, is this statute has only made the process of non-judicial foreclosure more efficient and less expensive for the lenders. The statute has not provided adequate opportunity for homeowners to prevent wrongful foreclosure. The current mandatory bond payment required by the court to stop the homeowner’s unlawful trustee sale prohibits most homeowners from that objective. Many homeowners find themselves in worse financial positions after the Great Recession, therefore paying the mandatory bond and legal fees is prohibitive. The current non-judicial statute also has not promoted the stability of land titles, in fact, quite the opposite. The Seattle City Council has funded and is conducting a land title audit of a cross-section of the city’s homes. This audit will reveal just how deteriorated the Washington land records have become. That audit data will be completed this year with a current release date projected to be the end of March.
Attorney Melissa Huelsman, counsel for Kristen Bain, argues public policy surrounding the Washington Deed of Trust Act during oral arguments.
During the Bain oral argument, Chief Justice Madsen queries Attorney Richard Llewelyn Jones, counsel for Kevin Selkowitz, about the importance of the need to know which entity is the owner of the obligations secured by the deed of trust.
And finally watch how counsel for MERS cannot answer the question asked by Justice Gonzales, “Who is the holder of the Note.”
Our Washington Legislature is forgetting that the Deed of Trust Act is also required to protect the integrity of the land records!
The integrity of title ensures that the home is owned by the person who is on recorded on title. If that title becomes corrupted, then entities can challenge ownership to that property. Clear title is very important to maintaining law and order surrounding home ownership.
Our Washington Legislature is also forgetting that the Deed of Trust Act be protection to homeowners to prevent wrongful foreclosure. Yet, now the legislature seems determined with SB 5968 to allow wrongful foreclosure to be lawful by a flick of their pens.
The full language of the Pro-Banker Bill, SB 5968 is found HERE.
ALERTING ALL WASHINGTON HOMEOWNERS:
CALL YOUR STATE REPRESENTATIVE AND SENATOR TODAY AND TELL THEM TO OPPOSE Senate Bill 5968!
To find your state legislator click HERE.
Thank you Karen, Josh, Steve, and Scott. If the banks are trying to make changes in Washington – you can better believe they are lobbying across the United States. Contact your local state representatives, no matter what state you are in, and ask for any and all bills relating to UCC, property rights and foreclosure laws.