Eleventh Circuit: No Wrongful Foreclosure Claim Under Georgia Law Where Foreclosure Was Result of Borrowers’ Default

In Haynes v. McCalla Raymer, LLC, No. 14–14036, __ F. 3d __, 2015 WL 4188459 (11th Cir. July 13, 2015), the Eleventh Circuit Court of Appeals affirmed the Northern District of Georgia’s grant of summary judgment in favor of Bank of America, N.A. (“BANA”) on the mortgagors’ wrongful foreclosure claim. The court held that the mortgagors lacked standing to challenge any alleged deficiencies in the assignment of the security deed from MERS to BANA and that the borrowers’ own default, rather than any alleged defect in the foreclosure notice, led to the foreclosure.

With respect to the assignment of the security deed, the mortgagors claimed that “the security deed was facially defective and not fit for recording” because there was not an official witness to the assignment. They also claimed that signatures on the security deed were forged, thereby rendering the assigned deed a nullity. The Eleventh Circuit rejected these arguments outright on the basis that the borrowers lacked standing to challenge the assignment under Georgia law because they were not parties to the assignment and were not intended beneficiaries thereof.  The court further noted that, while security deeds must be notarized in order to be recorded, deeds with even patent defects in attestation are still binding between the parties.  The court explained that “the inability to record the deed impacts only subsequent purchasers of the property” who may acquire the property in good faith and without notice of other interests in the property. The court also pointed out that Georgia’s foreclosure statute only provided a “limited” protection to consumers, and does not even require that the security deed be recorded prior to foreclosure, only that it be “filed.”  See O.C.G.A. § 44-14-162(b).  The court therefore saw “no reason that the patent defect in attestation at issue here would provide [the mortgagors] with standing to challenge an otherwise effective, if not properly recordable, assignment of their security deed.”

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