Yesterday the Washington Supreme Court issued its case in the Certified Question of Bain v. Metropolitan Mortgage.
Here’s the Opinion.
The primary issue before the court was whether MERS can be a lawful beneficiary on a deed of trust, with the power to appoint trustees under the Washington Deed of Trust Act when it does not actually hold the promissory notes that secures the deed of trust.
The court held that only the actual holder of the promissory note evidencing the debt may be a beneficiary with the power to appoint a trustee to foreclose. Or, as the court put it, “if MERS does not hold the note, it is not a lawful beneficiary.”
The court declined to answer what the legal effect is, if any, of a foreclosure, when MERS did foreclose as the beneficiary.
Our gut is that what is in the past is in the past, unless a borrower can prove fraud, or actual damages, based on Brown v. Household Realty, 146 Wn. App. 157, 189 P.3d
233 (2008) (holding that where the grantor of a deed of trust fails to invoke the remedies provided by the deed of trust act (ch. 61.24 RCW) before the deed is foreclosed in a trustee’s sale, the grantor waives claims based on the underlying obligation secured by the deed). But see RCW 61.24.127 which narrows Brown to some extent.
Here’s the opinion in Niday v. GMAC Mortgage, LLC.
Washington’s version of this case, Bain v. Metropolitan Mortgage, MERS, et al. is pending with the Washington Supreme Court.
We’ll post it when it comes out.
The Bankruptcy Court lifted the automatic stay, allowing JP Morgan to proceed with a foreclosure on Lincoln Towern (Bellevue), unit 3905. It is vested in a Tom Hazelrigg entity, TRH Lenders – at least for now.
Unit 4102 (shown at left), was a similar condo that was owned by a different Hazelrigg entity, and has already been foreclosed. It was then listed for sale, sans the Chihuly, shown at left. Was this Kirby’s Chihuly?
We wonder what will happen to unit 3905 when it is foreclosed, and where will Dan Chun live when that happens? Will he have breach of lease damages against Hazelrigg or TRH?
Here’s the status on the real property in this bankruptcy.
First, stay has been lifted on the Klee condo. Expect Flagstar Bank to foreclose on that soon.
Second, Chase has moved to foreclose on the Lincoln Tower condo (unit 3905), vested in TRH Lenders, LLC. The other Lincoln Tower condo (unit 4102) was foreclosed prior to the bankruptcy.
Third, GE Commercial Finance Business Property Corporation just filed a motion to lift the automatic stay to complete/perfect its foreclosure of the Bank of the West Building (pictured above left) and another building just down the street, pictured here:
We didn’t know Tom had an interest in either building. Here and here are letters from an attorney - who purports to represent Tom Hazelrigg’s interests – but doesn’t say precisely who he represents. One of the letters threatens lawsuits related to an alleged Tom Hazelrigg leasehold interest – a penthouse in the Bank of the West Building.
Tom Hazelrigg should list those lawsuits as an asset of the estate, or lose them down the road. Lawsuits that aren’t listed on a bankruptcy schedule are lost after discharge under the doctrines of standing and judicial estoppel. And if he is going to come forward and claim those lawsuits as his, how can he then “selectively” plead the Fifth? Things are getting complicated fast!
There are two new updates to the Hazelrigg bankruptcy saga. First, here is the US Trustee’s reply in support of his Motion to Compel Hazelrigg to file his bankruptcy schedules. So far Hazelrigg has refused, citing his Fifth Amendment privilege against sel incrimination.
The US Trustee’s reply is this:
(1) Attorney Marc Stern’s opposition to the Motion to Compel cited rumors of criminal investigations into Hazelrigg, and nothing more. Stern lacked personal knowledge, thus his declaration is worthless (We agree with this argument).
(2) Hazelrigg’s claim he can’t travel to Washington is also unsupported. There is just a letter from a doctor citing health concerns – but no sworn testimony without any sort of foundation. (We agree with this argument too).
(3) Hazelrigg also seems to claim at various times that records are missing. TEP pointed out before that he jumps between the Fifth Amendment, and the “I don’t have the info” defense. The US Trustee correctly points out, that simply lacking the info is not a defense. If that is the case, the US Trustee says, then say so, under penalty of perjury.
On another front, JP Morgan Chase has asked the bankruptcy court for permission to foreclose on Lincoln Tower unit 3905. It is currently titled in a Hazelrigg entity called “TRH Lenders.” Allegedly Dan Chun (whom we believe is a Hazelrigg family associate) lives there (at least as of a couple months ago) and rents the place from TRH Lenders.
Here’s the situation: Borrower stops paying his condo association dues (and perhaps his mortgage too). The condo association then starts a condo lien foreclosure lawsuit. The Lender receives notice of the lawsuit, but … it happens to be a securitized trust that is not very responsive, or some other entity like MERS (Mortgage Electronic Registration Systems) was slow to forward notice of the lawsuit to the lender. The lender may fall asleep at the wheel, or figure that its deed of trust cannot be trumped. The lender need not worry, right? Because it can always step in and “redeem” the property by paying the condo lien amount to the buyer in foreclosure, up to one year from the sale. WRONG! Summerhill Village Homeowners Association v. Roughley, 166 Wn. App. 625 (2012) holds against lenders in this situation, relying on the “you snooze, you lose” rule. Or perhaps more appropriately put the rule is this: Lenders lack redemption rights in a condo lien foreclosure. Start with ten or fifteen thousand dollars and start frequenting Sheriff’s sales. You could pick up a bargain, like Plumbline Profit Sharing Plan did in this case.