Third Circuit Court Hands U.S. Bank a Victory

The U.S. Court of Appeals for the Third Circuit has ruled in favor of U.S. Bank in a lawsuit in which a Pennsylvania couple sued to have their foreclosure dismissed on the grounds that U.S. Bank was not the holder of the note and did not have standing to foreclose.

The opinion on behalf of the Third Circuit Court was authored by Judge Michael A. Chagares. The court denied the appeal filed against U.S. Bank by Pennsylvania couple Lawrence and Debbie Zimmer, who were approved for a mortgage loan from Ameriquest Mortgage Company in June 2005.

According to the court ruling, the Zimmers also executed a note in favor of Ameriquest for $319,500. Five years later, in April 2010, the Zimmers entered into a loan modification agreement with Ameriquest and the note was assigned twice. The Zimmers, however, dispute the validity of those assignments. What is not disputed according to the court, however, is that the Zimmers stopped making payments in August 2010, four months after entering into the loan modification agreement, and failed to make any payments after that date.

U.S. Bank, which claims it is the holder of the mortgage, began foreclosure proceedings in April 2012. The Zimmers and their attorney claimed that it was not for the same note he signed in June 2005. The court denied U.S. Bank’s motion for summary judgment in October 2013, and both parties in the suit subsequently filed motions for summary judgment against each other.

The District Court denied the Zimmers’ summary judgment, saying they failed to produce any evidence that U.S. Bank was not the holder of the note.

“Regarding U.S. Bank’s summary judgment motion, the District Court found there was no genuine issue of material fact because the Zimmers admitted they executed the mortgage of $319,500 in favor of Ameriquest, the Zimmers are record owners and the mortgage is in default, and the Zimmers have failed to make monthly payments on the loan due since Aug. 1, 2010,” Chagares wrote in the opinion.

The Zimmers took their case to the Third Circuit Court, saying that U.S. Bank did not have standing to pursue foreclosure because the note was not properly dated, stamped or notorized; the bank’s expert, Javier Toboas, had said he believed the note did not contain proper indorsements; and U.S. bank offered two different copies of the note in summary judgement filings, according to the court.

The Third Circuit Court rejected all three of the Zimmers’ arguments, saying that there was no genuine issue of material fact on the first and third arguments about the lack of a date on the note and the assertion that U.S. Bank submitted two different notes. On the Zimmers’ claim about the Toboas opinion, Chagares said that opinion “did not concern the validity of the original note but the validity of the subsequent assignments, which is not relevant here.”

A spokesperson from U.S. Bank told MReport that the bank had no comment on the court’s ruling.

Click here to view the court’s complete ruling.