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News & Press: Court Cases

Trustee's Sales: Yhudai v. Impac Funding Corporation

Tuesday, August 16, 2016  
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A borrower challenged a securitized trust's ownership of a deed of trust by alleging that the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust's "closing date". Under New York law, transfers that violate the terms of the trust instrument are voidable by the parties to the trust agreement, and the borrower is a third party without standing to challenge the validity of an assignment. (A previous New York decision held that an assignment after the closing date is void, but was reversed on appeal.) The court pointed out in Footnote 6 that if the note was timely assigned to the Trust, as plaintiff alleged, so was the deed of trust. Although the conveyance of the note may have been separated in time from the execution, recording, and physical transfer of the instrument reflecting the assignment of the deed of trust, that gap does not alter the legal fact that the deed of trust and the right to foreclose was, as a matter of law, transferred along with the note. (Ed. note: "The mortgage follows the note".)

Cal.App. 2nd Dist. (B262509)  7/29/16


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