An assignment of mortgage is a document which indicates that a mortgage has been transferred from the original lender or borrower to a third party. Assignments of mortgage are more commonly seen when lenders sell mortgages to other lenders. When someone has what is known as an assumable mortgage, it is possible for the borrower to transfer the mortgage to another person, in which case an assignment of mortgage will need to be filed to record the transaction.
This document indicates that the loan obligation has been transferred. It usually describes the property so that there is no confusion about which piece of real estate is under discussion. It should include the name of the original party, along with the name of the third party, with contact information and the date that the assignment of mortgage becomes valid. In the case of an assignment of mortgage between lenders, the document notes the identity of the borrower, while assumed mortgages identify the lender and indicate that the transfer took place between borrowers.
Lenders routinely sell mortgages, and in fact a mortgage may be transferred multiple times before it has been paid off. Lenders are not required to notify borrowers when they sell mortgages, and borrowers do not have an opportunity to contest the sale. The new lender is required to send out a notification indicating that a sale took place and providing information about how to make mortgage payments to the new lender. The borrower may attempt to negotiate a change in terms, or if the borrower does not want to work with the new lender, it may be possible to apply for a new mortgage to pay off the old one.
With an assumable mortgage, the issue is a bit trickier. Lenders do not want borrowers to assign their mortgages to people who cannot keep up with the payments, as then they will be faced with having to foreclose and sell the property, and this adds to the expense of servicing the loan. As a result, people who wish to assume a mortgage must demonstrate that they are financially capable of taking on the loan, and that they fully understand the terms of the loan.
An assignment of mortgage will be filed in the same government office which handles ownership records, property taxes, and related matters. People should be aware that sometimes an assignment of mortgage is not recorded for several months, especially if there is a backlog of documenting material which needs to be gone through.
If borrowers receive a notice in the mail indicating that their mortgage has been transferred, they should call their lenders to confirm the sale and ask who the mortgage was sold to. It is also advisable to check the records office to confirm that an assignment of mortgage has been followed. Borrowers should be aware that some scammers prey on people by claiming that their mortgages have been transferred when this is not actually the case.
ASSIGNMENT AND CANCELLATION OF MORTGAGES
701.02 Assignment not effectual against creditors unless recorded and indicated in title of document; applicability.
701.04 Cancellation of mortgages, liens, and judgments.
701.041 Title insurer; mortgage release certificate.
701.06 Certain cancellations and satisfactions of mortgages validated.
701.01 Assignment.–Any mortgagee may assign and transfer any mortgage made to her or him, and the person to whom any mortgage may be assigned or transferred may also assign and transfer it, and that person or her or his assigns or subsequent assignees may lawfully have, take and pursue the same means and remedies which the mortgagee may lawfully have, take or pursue for the foreclosure of a mortgage and for the recovery of the money secured thereby.
History.–s. 1, Dec. 11, 1834; RS 1985; GS 2498; RGS 3840; CGL 5743; s. 782, ch. 97-102.
701.02 Assignment not effectual against creditors unless recorded and indicated in title of document; applicability.—
(1) An assignment of a mortgage upon real property or of any interest therein, is not good or effectual in law or equity, against creditors or subsequent purchasers, for a valuable consideration, and without notice, unless the assignment is contained in a document that, in its title, indicates an assignment of mortgage and is recorded according to law.
(2) This section also applies to assignments of mortgages resulting from transfers of all or any part or parts of the debt, note or notes secured by mortgage, and none of same is effectual in law or in equity against creditors or subsequent purchasers for a valuable consideration without notice, unless a duly executed assignment be recorded according to law.
(3) Any assignment of a mortgage, duly executed and recorded according to law, purporting to assign the principal of the mortgage debt or the unpaid balance of such principal, shall, as against subsequent purchasers and creditors for value and without notice, be held and deemed to assign any and all accrued and unpaid interest secured by such mortgage, unless such interest is specifically and affirmatively reserved in such an assignment by the assignor, and a reservation of such interest or any part thereof may not be implied.
(4) Notwithstanding subsections (1), (2), and (3) governing the assignment of mortgages, chapters 670-680 of the Uniform Commercial Code of this state govern the attachment and perfection of a security interest in a mortgage upon real property and in a promissory note or other right to payment or performance secured by that mortgage. The assignment of such a mortgage need not be recorded under this section for purposes of attachment or perfection of a security interest in the mortgage under the Uniform Commercial Code.
(5) Notwithstanding subsection (4), a creditor or subsequent purchaser of real property or any interest therein, for valuable consideration and without notice, is entitled to rely on a full or partial release, discharge, consent, joinder, subordination, satisfaction, or assignment of a mortgage upon such property made by the mortgagee of record, without regard to the filing of any Uniform Commercial Code financing statement that purports to perfect a security interest in the mortgage or in a promissory note or other right to payment or performance secured by the mortgage, and the filing of any such financing statement does not constitute notice for the purposes of this section. For the purposes of this subsection, the term “mortgagee of record” means the person named as the mortgagee in the recorded mortgage or, if an assignment of the mortgage has been recorded in accordance with this section, the term “mortgagee of record” means the assignee named in the recorded assignment.
History.–s. 1, ch. 6909, 1915; RGS 3841; CGL 5744; s. 13, ch. 20954, 1941; s. 2, ch. 89-41; s. 20, ch. 2005-241.
701.03 Cancellation.–Whenever the amount of money due on any mortgage shall be fully paid, the mortgagee or assignee shall within 60 days thereafter cancel the same in the manner provided by law.
History.–RS 1986; GS 2499; RGS 3842; CGL 5745; s. 171, ch. 73-333.
701.04 Cancellation of mortgages, liens, and judgments.—
(1) Within 14 days after receipt of the written request of a mortgagor, the holder of a mortgage shall deliver to the mortgagor at a place designated in the written request an estoppel letter setting forth the unpaid principal balance, interest due, and the per diem rate. Whenever the amount of money due on any mortgage, lien, or judgment shall be fully paid to the person or party entitled to the payment thereof, the mortgagee, creditor, or assignee, or the attorney of record in the case of a judgment, to whom such payment shall have been made, shall execute in writing an instrument acknowledging satisfaction of said mortgage, lien, or judgment and have the same acknowledged, or proven, and duly entered of record in the book provided by law for such purposes in the proper county. Within 60 days of the date of receipt of the full payment of the mortgage, lien, or judgment, the person required to acknowledge satisfaction of the mortgage, lien, or judgment shall send or cause to be sent the recorded satisfaction to the person who has made the full payment. In the case of a civil action arising out of the provisions of this section, the prevailing party shall be entitled to attorney’s fees and costs.
(2) Whenever a writ of execution has been issued, docketed, and indexed with a sheriff and the judgment upon which it was issued has been fully paid, it shall be the responsibility of the party receiving payment to request, in writing, addressed to the sheriff, return of the writ of execution as fully satisfied.
History.–s. 1, ch. 4138, 1893; s. 1, ch. 4918, 1901; GS 2500; RGS 3843; CGL 5746; s. 1, ch. 80-17; s. 15, ch. 93-250; s. 12, ch. 94-170.
701.041 Title insurer; mortgage release certificate.—
(1) DEFINITIONS.–For purposes of this section:
(a) “Mortgage” means a mortgage or mortgage lien on an interest in real property in this state, including any modifications thereof, given to secure a loan in the principal amount of $500,000 or less, other than a mortgage securing an open-end or revolving credit agreement.
(b) “Mortgagee” means:
1. The grantee of a mortgage; or
2. If a mortgage has been assigned of record, the last person to whom the mortgage has been assigned of record.
(c) “Mortgage servicer” means the last person to whom a mortgagor or the mortgagor’s successor in interest has been instructed by a mortgagee to send payments on a loan secured by a mortgage. A person transmitting a payoff statement is the mortgage servicer for the mortgage described in the payment statement.
(d) “Mortgagor” means the grantor of a mortgage.
(e) “Payoff statement” means a statement of the amount of:
1. The unpaid balance of a loan secured by a mortgage, including principal, interest, and any other charges properly due under or secured by the mortgage.
2. Interest on a per-day basis for the unpaid balance.
(f) “Record” means to record with the clerk of the circuit court or the comptroller in the county or counties in which the real property securing the mortgage is located.
(g) “Title insurer” means a corporation or other business entity authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 624.
(2) CERTIFICATE OF RELEASE.–An officer or duly appointed agent of a title insurer may, on behalf of a mortgagor or a person who acquired from the mortgagor title to all or a part of the property described in a mortgage, execute a certificate of release that complies with the requirements of this section and record the certificate of release in the real property records of each county in which the mortgage is recorded if a satisfaction or release of the mortgage has not been executed and recorded after the date payment in full of the loan secured by the mortgage was made in accordance with a payoff statement furnished by the mortgagee or the mortgage servicer.
(3) CONTENTS.–A certificate of release executed under this section must contain:
(a) The name of the mortgagor, the name of the original mortgagee, and, if applicable, the mortgage servicer; the date of the mortgage; the date of recording; and the volume and page or document number in the real property records in which the mortgage is recorded, together with similar information for the last recorded assignment of the mortgage.
(b) A statement that the mortgage, including any modifications thereof, was in the principal amount of $500,000 or less.
(c) The name of the title insurer filing the certificate of release, a statement that the person executing the certificate of release is an officer or a duly appointed agent of the title insurer, a statement that the title insurer is authorized and licensed to transact the business of insuring titles to interests in real property in this state under chapter 624 or chapter 626, and, if executed by a duly appointed agent, shall further provide the recording information of the appointment of such agent as required by subsection (4).
(d) A statement that the certificate of release is made on behalf of the mortgagor or a person who acquired title from the mortgagor to all or a part of the property described in the mortgage.
(e) A statement that the mortgagee or mortgage servicer provided a payoff statement which was used to make payment in full of the unpaid balance of the loan secured by the mortgage.
(f) A statement that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the payoff statement and that a copy of the certificate of release was sent to the mortgagee or mortgage servicer that provided the payoff statement.
(a) A certificate of release authorized by subsection (2) must be duly executed, sworn to or affirmed under penalty of perjury before a notary public, and recorded and may be executed by an officer of a title insurer or by a duly appointed agent of a title insurer. Such delegation to an agent by a title insurer shall not relieve the title insurer of any liability for damages caused by the agent for the execution or recordation of a certificate of release.
(b) The appointment of an agent must be duly executed, acknowledged, and recorded by an officer of a title insurer and must state:
1. The title insurer as the principal.
2. The identity of the person, partnership, or corporation authorized to act as agent to execute and record certificates of release provided for in this section on behalf of the title insurer.
3. That the agent has the full authority to execute and record certificates of release provided for in this section on behalf of the title insurer.
(c) A separate appointment of agent shall not be necessary for each certificate of release provided that at least one such appointment is recorded in the county in which the mortgaged property is located. The appointment of agent must be rerecorded where necessary to establish authority of the agent, but such authority shall continue until a revocation of appointment is recorded in the office of the county recorder in which the appointment of agent was recorded.
(d) After recordation of a title insurer’s revocation of appointment in the office of the county recorder in which the appointment was recorded, the agent whose appointment is revoked in such county shall have no further authority to execute or record certificates of release as provided in this section on behalf of that title insurer with respect to any mortgages recorded in that county, and no such certificate of release thereafter executed or recorded by that agent on behalf of that title insurer shall be effective to release any mortgage recorded in that county.
(5) EFFECT.–For purposes of releasing the mortgage, a certificate of release containing the information and statements provided for in subsection (3) and executed as provided in subsection (4) is entitled to be recorded with the county recorder and operates as a release of the mortgage described in the certificate of release. The county recorder shall rely upon the certificate to release the mortgage. Recording of a certificate of release by a title insurer or its agent shall not relieve the mortgagor, or the mortgagor’s successors or assigns, from any personal liability on the loan or other obligations secured by the mortgage. A certificate of release recorded pursuant to this section fulfills any other obligation of the mortgagee or mortgage servicer to file a satisfaction or release of the mortgage.
(6) LIABILITY OF TITLE INSURER.–
(a) In addition to any other remedy provided by law, a title insurer recording a certificate of release under this section shall be liable to the holder of the obligation secured by the mortgage for actual damage sustained due to the recording of the certificate of release. Reasonable costs and attorneys’ fees shall be awarded to the prevailing party.
(b) The title insurer named in a certificate of release filed by a duly appointed agent shall be liable pursuant to this subsection without regard to whether the title insurer authorized the specific certificate of release recorded by the agent.
(c) The title insurer shall have no liability under this subsection if the title insurer shows that payment in full of the unpaid balance of the loan secured by the mortgage was made in accordance with the payoff statement furnished by the mortgagee or the mortgage servicer.
(d) Liability of a title insurer pursuant to this section shall be considered to be a title insurance claim on real property in this state pursuant to s. 627.7865.
(7) RECORDING.–If a mortgage is recorded in more than one county and a certificate of release is recorded in one of such counties, a certified copy of the certificate of release may be recorded in another of such counties with the same effect as the original. In all cases, the certificate of release shall be entered and indexed as satisfactions of mortgage are entered and indexed.
(8) APPLICATION.–This section applies only to a mortgage, including any modifications of such mortgage, in the principal amount of $500,000 or less.
(9) PREMIUM.–The Financial Services Commission shall adopt rules establishing an actuarially sound premium charge to be made for each certificate of release recorded pursuant to this section.
History.–s. 1, ch. 2005-122.
701.06 Certain cancellations and satisfactions of mortgages validated.–All cancellations or satisfactions of mortgages made prior to the enactment of chapter 4138, Acts of 1893, by the mortgagee or assignee of record of such mortgage entering same on the margin of the record of such mortgage in the presence of the custodian of such record and attested by the said custodian and signed by said mortgagee or assignee of record of such mortgage, shall be valid and effectual for every purpose as if the same had been done subsequent to the enactment of chapter 4138, Acts of 1893.
History.–s. 1, ch. 14763, 1931; CGL 1936 Supp. 5746(1).
FORECLOSURE MILL EMPLOYEE SIGNATURES (FORGERIES) ON ASSIGNMENT OF MORTGAGES.
For more info on Assignment of Mortgage head Over to
LPS 101 & MERS 101
Diane GRAY v. FEDERAL NATIONAL MORTGAGE ASSOCIATION.
Decided: January 10, 2014
Diane Gray appeals from a summary judgment entered by the Jefferson Circuit Court (“the trial court”) in favor of the Federal National Mortgage Association (“Fannie Mae”). We reverse the trial court's judgment.
Facts and Procedural History
On April 15, 2011, Fannie Mae filed a complaint against Gray asserting that, “by virtue of foreclosure on April 4, 2011, of that certain Mortgage originally between Diane Gray and Mortgage Electronic Registration Systems, Inc. acting solely as nominee for Irwin Mortgage Corporation subsequently transferred and assigned to EverHome Mortgage Company and further purchased by [Fannie Mae],” Fannie Mae is the owner of certain real property located in Jefferson County. Fannie Mae alleged that it had served a written demand for possession on Gray, that Gray had failed to vacate the property, and that Gray had lost her right to redeem the property. Fannie Mae requested possession of the property, money damages for the wrongful retention of the property, and an order stating that Gray had “forfeited her right to redemption for failing to vacate the property.” On May 18, 2011, Gray answered and asserted as an affirmative defense that the foreclosure was void.
On March 27, 2012, Fannie Mae filed a motion for a summary judgment, along with evidentiary materials in support thereof. Fannie Mae submitted the affidavit of Robin Murdock, vice president for “EverBank sbm Everhome Mortgage Company” (hereinafter referred to as “EverBank” or “EverHome”), the servicer of the loan, in which Murdock stated, in pertinent part:
“3. In my present position, I have direct access to business records of EverBank as loan servicer regarding the account which forms the basis of this action and am a custodian of said business records. I have reviewed said relevant business records, and consistent with my review of the business records of EverBank as loan servicer, I have knowledge of the facts set forth in this Affidavit.
“4. The business records were made in the ordinary course of the business and it was the regular course of said business to make such records. Said records relative to Defendant GRAY ․ and this action, were made at the time of the transaction, occurrence or event referred to therein or were made within a reasonable time thereafter, and said records are kept under my care, supervision, and/or control.
“5. On or about January 30, 2004, GRAY entered into and executed that certain Note, in favor of Irwin Mortgage Corporation and its successors and assigns․
“6. On or about January 30, 2004, GRAY entered into and executed that certain Mortgage, securing the Note, in favor of FANNIE MAE․
“7. On May 10, 2007, Irwin Mortgage Corporation executed an Assignment of Mortgage to EverHome Mortgage Company (aka EverBank)․
“8. On November 4, 2010 and December 31, 2010, GRAY [was] sent a Notice of Default. This notice informed GRAY of [her] failure to make payments according to the terms of the Note and Mortgage and advised her of the possibility of foreclosure․ This notice was sent to the address recited in the Mortgage.
“9. On February 8, 2011, GRAY [was] sent a Notice of Acceleration at the address recited in the mortgage․
“10. The notice of foreclosure was published on February 9, 16, 23, and March 5, 2011, in The Alabama Messenger․
“11. On April 4, 2011, the Mortgage was foreclosed through a valid foreclosure sale․
“12. By virtue of the April 4, 2011 foreclosure sale, FANNIE MAE was the highest and best bidder at the foreclosure sale and is the owner of the [property].
“13. On April 4, 2011, a demand for possession of the property was sent to the GRAY at the property address set forth in the Mortgage․”
Fannie Mae also attached a note dated January 30, 2004, given by Gray in favor of Irwin Mortgage Corporation; a mortgage (“the mortgage”) relating to the property given by Gray to Mortgage Electronic Registration Systems, Inc. (“MERS”), acting solely as a nominee for Irwin Mortgage and its successors and assignees; an assignment of the mortgage from MERS, as nominee for Irwin Mortgage and its successors and assignees, to EverHome dated May 10, 2007; a letter dated November 4, 2010, notifying Gray that she was in default on her mortgage payments and that she had 20 days to get her account current or the mortgage would be foreclosed; a letter to Gray dated December 31, 2010, notifying her of her breach of the note and of the mortgage and stating that she must pay the amount of $21,094.53 in order to reinstate the loan and to avoid acceleration of the total amount due under the note and the mortgage; a letter dated February 8, 2011, notifying Gray that she was in default of the note and the mortgage and that EverHome was accelerating to maturity the entire unpaid balance of the loan; proof of publication of the notices in the Alabama Messenger, a newspaper of general circulation in Jefferson County; a foreclosure deed dated April 4, 2011, from EverHome to Fannie Mae, which states that the foreclosure sale occurred “at public outcry in front of the Courthouse door in Birmingham, Jefferson County, Alabama,” on that day “between the legal hours of sale” and which includes a certification from the auctioneer that the sale took place on that date at 11:33 a.m.; and a demand for possession of the property sent by Fannie Mae to Gray dated April 4, 2011.
On May 1, 2012, Gray filed her response to the summary-judgment motion, along with her affidavit in support thereof. In her affidavit, Gray averred, in pertinent part:
“I bought the property ․ on January 30, 2004, and signed a promissory note with Irwin Mortgage Corporation and executed a mortgage with [MERS] as nominee for Irwin Mortgage Corporation. The note and mortgage are secured by the property․ The mortgage was recorded in the probate records of Jefferson County, Alabama. I am the sole owner of the property in which I currently reside.
“The mortgage and note [were] apparently transferred to EverHome Mortgage Company at some point thereafter; although, I was never notified of said transfer. Prior to the foreclosure EverHome was acting as the servicer of my mortgage loan. The original terms of the note and mortgage required [me] to pay $708.59 each month which included escrow funds for taxes and insurance. My mortgage is a Fannie Mae mortgage and so states on the face of the document. In September 2007, I lost my job due to company layoffs. As a result of my job loss, my household income significantly decreased, and I began having difficulty paying the mortgage payments. Because of the circumstances, I began seeking assistance from the mortgage company regarding my difficulty in making the monthly mortgage payments. In October 2007, I began contacting the mortgage company about making payment arrangements. I tried to get EverHome to assist me, but it refused so I was forced to file a chapter 13 bankruptcy petition on March 31, 2008 to save my home. While I was in Bankruptcy, I lost my job in October 2010, and had difficulty again making my mortgage payments and the bankruptcy payments. I got behind with the mortgage payments again and was sent a notice that EverHome intended to foreclose on my home. I again contacted the mortgage company in February 2011 in an effort to save my home and asked for HAMP [Home Affordable Modification Program] modification through EverHome's loss mitigation program.
“In February and March 2011, I spoke to the mortgage company numerous times about a loan modification or work out plan through their loss mitigation program. They told me they would work with me and that I qualified for assistance and would get a loan modification. However, they did not follow through with assisting me, and I never got the loan modification to which I was promised. I could never get anyone to follow up with the modification despite my repeated calls to the mortgage company. I sent all the requested information to them; however, I never heard from them. I had to keep calling them back regarding my application for assistance. I was told by them that the foreclosure would not go forward as long as they were working with me through the loss mitigation program. Because of these communications with the lender, I was confused about the foreclosure procedure. Further, I relied upon these communications and believed that the mortgage company was working with me to help me keep my home and avoid foreclosure.
“Although, I was aware I was in foreclosure, I never received any notice that a foreclosure sale had been set for April 4, 2011. On Friday, April 1, 2011, I was told by representatives of the mortgage company not to worry, that they were still reviewing my account for a loan modification and that they would postpone any sale until the review was finished. My first knowledge [of] the foreclosure sale was the morning of the sale (April 4, 2011) at approximately 9:00 a.m. when I called the mortgage company to check on the status of the mortgage and was advised that the house had was set to be sold that day at noon and that there was nothing further that they could do to stop the foreclosure sale. They refused to offer me any further help to save my home. I went to the courthouse at approximately 11:20 am the morning of the sale and stood on the front steps of the main entrance of the Jefferson County Courthouse. I stayed there until after 12:30 p.m. and no one ever appeared there to [sell] my house. I later received a letter from the law office of Sirote & Permutt advising me that the house had been sold and asking me to vacate the premises.
“I was never sent nor did I receive any proper notice of default or an opportunity to cure the delinquency. Furthermore, I was never provided with a notice of intent to accelerate as required by my mortgage contract. Paragraph 21 requires that the mortgage company send me a default notice and a notice of intent to accelerate the mortgage indebtedness. I was not provided with a notice of intent to accelerate stating the following elements: (a) the specific default, (b) the action required to cure the default, (c) a date by which to cure the default, and (d) that failure to cure the default on or before the date specified in the notice will cause acceleration of the debt. The notice was required by the mortgage, and was extremely important. I have a meritorious defense to this action. This property was wrongly foreclosed. Even if the mortgage contract is held to be valid, EverHome has failed to abide by the terms and conditions of the mortgage contract. Since its power of sale and ability to foreclose is conditioned upon the mandates and procedures of the contract, their failure to follow said contract renders the foreclosure sale invalid. EverHome wrongfully foreclosed and attempted to purchase for itself the property on April 4, 2011 without giving me a proper notice of the default, a notice of intent to accelerate, a notice of sale, and an opportunity to cure that default. Prior to acceleration of the debt, I did not receive the required notice outlined in the mortgage document that I was given on January 30, 2004.
“The indebtedness on the property at the time of the foreclosure sale was approximately $75,000.00. [Fannie Mae] bought the property from itself at the foreclosure sale for $73,185.89.
“Failure to set aside this foreclosure sale would render a harsh result on me due to my financial situation. I want to keep this property.”
Both parties moved to strike the affidavits submitted by the other party. On May 22, 2012, Fannie Mae filed a reply to Gray's response to the summary-judgment motion. Fannie Mae attached an affidavit of the foreclosure-sale auctioneer averring that he had conducted the foreclosure sale on April 4, 2011, “at or about 11:33 AM during the legal hours of sale at the place appointed for foreclosure auctions in front of the main entrance to the Courthouse in Birmingham, Jefferson County, Alabama.”
After a hearing, the trial court entered a judgment on June 22, 2012, in favor of Fannie Mae, awarding possession of the property to Fannie Mae and ordering the Jefferson County sheriff to restore possession of the property to Fannie Mae. The trial court found that Gray had forfeited her right of redemption by failing to deliver possession of the property to Fannie Mae after having been given 10 days' written notice. The trial court did not rule on the respective motions to strike. On July 25, 2012, Gray filed a postjudgment motion to alter, amend, or vacate the trial court's judgment; Fannie Mae filed a response to the motion on September 4, 2012. Following a hearing, the trial court denied Gray's postjudgment motion on September 6, 2012. On October 17, 2012, Gray filed her notice of appeal to this court. On May 22, 2013, this court transferred the appeal to the Alabama Supreme Court for lack of jurisdiction; that court subsequently transferred the appeal to this court, pursuant to Ala.Code 1975, § 12–2–7.
Standard of Review
“ ‘We review this case de novo, applying the oft-stated principles governing appellate review of a trial court's grant or denial of a summary judgment motion:
“ “ ‘We apply the same standard of review the trial court used in determining whether the evidence presented to the trial court created a genuine issue of material fact. Once a party moving for a summary judgment establishes that no genuine issue of material fact exists, the burden shifts to the nonmovant to present substantial evidence creating a genuine issue of material fact. ‘Substantial evidence’ is ‘evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.’ In reviewing a summary judgment, we view the evidence in the light most favorable to the nonmovant and entertain such reasonable inferences as the jury would have been free to draw.” '
“American Liberty Ins. Co. v. AmSouth Bank, 825 So.2d 786, 790 (Ala.2002) (quoting Nationwide Prop. & Cas. Ins. Co. v. DPF Architects, P.C., 792 So.2d 369, 372 (Ala.2000) (citations omitted)).”
General Motors Corp. v. Kilgore, 853 So.2d 171, 173 (Ala.2002).
On appeal, Gray argues that the summary judgment entered by the trial court was improper because, she says, there were genuine issues of material fact in dispute. Specifically, she argues that there was no evidence indicating that EverHome was the owner of the note at the time of the foreclosure sale. We agree. The only evidence regarding the note is a copy of the note indorsed by the vice president of Irwin Mortgage; that indorsement is not dated and does not include the name of the assignee of the note. In Harris v. Deutsche Bank National Trust Co., [Ms. 1110054, Sept. 13, 2013] _ So.3d _, _ (Ala.2013), our supreme court reasoned:
“The Harrises also argue that the power of sale described in the mortgage was given by the Harrises as part of the security for the repayment of the debt evidenced by the note and can be ‘executed’ only by the trustee if it was the party entitled to the money thus secured. They cite § 35–10–12, Ala.Code 1975, which states that the power to sell lands given in a mortgage ‘is part of the security and may be executed by any person, or the personal representative of any person who, by assignment or otherwise, becomes entitled to the money thus secured.’ In Carpenter v. First National Bank, 236 Ala. 213, 181 So. 239 (1938), this Court applied the predecessor to § 35–10–12, stating:
“ ‘A power of sale in a mortgage of real estate is a part of the security, and passes to any one who by assignment or otherwise becomes entitled to the money secured. Code 1923, § 9010.
“ ‘But an agent of such holder to whom the mortgage is delivered merely for the purpose of foreclosure, having no ownership of the debt, is not authorized to foreclose in his own name, and execute a deed in his name to the purchaser. Ownership of the debt does not pass to such agent merely because the note is indorsed in blank. Such foreclosure is ineffective, and a court of equity may take jurisdiction for the purpose of foreclosure.’
“236 Ala. at 215, 181 So. at 240 (emphasis added). The foreclosure deed in this case was executed by the trustee in its own name, not on behalf of the lender, SouthStar, or any other party to which SouthStar may have assigned the note. The deed was effective to transfer title and to foreclose the rights of the mortgagor, therefore, only if the trustee, in its own name, was entitled to receive the money secured by the note at the time it executed and delivered that deed.
“The parties agree in their briefs, however, and we accept for purposes of this case, that the mortgage given MERS ‘solely as a nominee for Lender and Lender's successors and assigns' did not entitle MERS to the money secured by the mortgage. Accordingly, the subsequent assignment of that mortgage by MERS to the trustee did not accomplish an assignment of that right to the trustee. The trustee in fact concedes that summary judgment was inappropriate in this case and that on the state of the current record there is a genuine issue of material fact as to whether the trustee received an assignment of the note so as to have entitled it to execute the power of sale in its own name. (It asserts that, if this case is returned to the trial court, it will introduce ‘conclusive evidence’ of its receipt as early as 2005 of the debt evidenced by the original note signed by the Harrises.) The summary judgment entered by the trial court therefore is due to be vacated and the case remanded for a determination as to whether the trustee received an assignment of the right to receive the money secured by the note, and thus the power to execute the corresponding power of sale in its own name, before executing and delivering the foreclosure deed.”
(Footnote omitted.) See also Ex parte BAC Home Loans Servicing, LP, [Ms. 1110373, Sept. 13, 2013] _ So.3d _, _ (Ala.2013) (holding that the right of the foreclosing entity to conduct a foreclosure sale must be proven in order to show that the buyer at a foreclosure sale has superior legal title and a cause of action to eject the debtor). Further, in Coleman v. BAC Servicing, 104 So.3d 195 (Ala.Civ.App.2012), this court explained:
“Alabama law specifically contemplates that there can be a separation. See § 35–10–12 and Harton [v. Little, 176 Ala. 267, 57 So. 851 (1911) ]. The Restatement (Third) of Property: Mortgages takes the position that a note and mortgage can be separated but that ‘[t]he mortgage becomes useless in the hands of one who does not also hold the obligation because only the holder of the obligation can foreclose.’ Restatement (Third) of Property: Mortgages § 5.4, Reporter's Note—Introduction, cmt. a at 386. The Restatement explains: “ ‘The note is the cow and the mortgage the tail. The cow can survive without a tail, but the tail cannot survive without the cow.” ’ Id. at 387 (quoting Best Fertilizers of Arizona, Inc. v. Burns, 117 Ariz. 178, 179, 571 P.2d 675, 676 (Ct.App.), reversed on other grounds, 116 Ariz. 492, 570 P.2d 179 (1977)).”
104 So.3d at 205.
Similar to Harris, in the present case “the mortgage given MERS ‘solely as a nominee for [Irwin Mortgage] and [Irwin Mortgage's] successors and assigns' did not entitle MERS to the money secured by the mortgage. Accordingly, the subsequent assignment of that mortgage by MERS to [EverHome] did not accomplish an assignment of that right to [EverHome].” Id. at _. EverHome presented no evidence indicating that the note had been transferred “by delivery of possession or by written assignment.” Coleman v. BAC Servicing, 104 So.3d at 203 (“The promissory note evidencing that debt was a bearer instrument that could be transferred in two ways: by delivery of possession or by written assignment.”); see also Ala.Code 1975, § 8–5–24 (“The transfer of a ․ note given for the purchase money of lands, whether the transfer be by delivery merely or in writing, expressed to be with or without recourse on the transferor, passes to the transferee the lien of the vendor of the lands.”). “ ‘[O]nly the holder of the obligation can foreclose.” ’ Coleman, 104 So.3d at 205. Because there was no evidence presented that EverHome, the foreclosing entity, was the holder of the note at the time of the foreclosure sale, we conclude that, like in Harris, the summary judgment entered in the present case was improper.
Gray makes several other arguments regarding the propriety of the summary judgment and the denial of her motion to strike. Because we are reversing the summary judgment on the merits, we pretermit discussion of those arguments. See Crews v. McLing, 38 So.3d 688, 696 (Ala.2009).
Based on the foregoing, we reverse the summary judgment and remand this cause for further proceedings.
REVERSED AND REMANDED.
In defense of the ejectment action initiated by the Federal National Mortgage Association (“Fannie Mae”), Diane Gray argued that the foreclosure deed pursuant to which Fannie Mae claimed to own the property was invalid because there was no authority to conduct the foreclosure sale upon which that deed is based. Among other things, Gray contends that, in support of its summary-judgment motion in its ejectment action, Fannie Mae failed to present prima facie evidence that either the mortgage or the note had been transferred to EverHome Mortgage Company before EverHome conducted the foreclosure sale.1
The record indicates that on May 10, 2007, Mortgage Electronic Registration Systems, Inc. (“MERS”), in its capacity as nominee for Irwin Mortgage Company, the original mortgagee, purported to assign to EverHome the mortgage executed by Gray in favor of Irwin Mortgage Company. However, the power to sell or foreclose is available only to a person or entity entitled to payment of the money secured by the mortgage or note. § 35–10–7, Ala.Code 1975. In Harris v. Deutsche Bank National Trust Co., [Ms. 1110054, Sept. 13, 2013] _ So.3d _ (Ala.2013), our supreme court held that when an agent, or nominee, of a lender is not entitled under § 35–10–7 to receive the money secured by a mortgage, the agent may not purport to transfer the right to the receive that money on behalf of the lender. In other words, under the facts of this case, if MERS was not entitled to receive the money secured by the mortgage from Gray, it could not validly assign to EverHome the right to receive that money. The language specifying the rights afforded MERS under Gray's mortgage is identical to the language setting forth the rights MERS had under the mortgage at issue in Harris. In Harris, the parties agreed that the language detailing MERS's rights under the mortgage did not entitle MERS under § 35–10–7 to the money secured by the mortgage at issue, and our supreme court accepted that agreement for the purposes of resolving the appeal. _ So.3d at _. In this case, there is no such agreement. However, Fannie Mae has not argued that at the time MERS executed its purported assignment of Gray's mortgage to EverHome, MERS had a right to receive the money secured by the mortgage. In the absence of such arguments or evidence, I believe the holding in Harris controls this issue in this case. EverHome could foreclose and transfer the property via a foreclosure deed to Fannie Mae only if, at the time it foreclosed, EverHome had the right to receive the money secured by the mortgage. Harris, _ So.3d at _. Under our supreme court's recent holding in Harris, MERS could not properly assign the right to the payment of the money secured by Gray's mortgage to EverHome. Accordingly, I must conclude that Fannie Mae failed to present a prima facie case that EverHome had acquired the right to foreclose on Gray's mortgage by virtue of a purported assignment of that mortgage from MERS to EverHome.2
However, the inquiry does not necessarily end when it is determined that a valid or timely assignment of a mortgage did not occur. This court has recognized that a mortgage need not be assigned in order to enable an owner of the debt secured by that mortgage to foreclose under a power of sale. Perry v. Federal Nat'l Mortg. Ass'n, 100 So.3d 1090, 1095 (Ala.Civ.App.2012). A promissory note secured by a mortgage that is indorsed in blank may be transferred merely by possession. Id. This court has explained:
“The promissory note evidencing that debt was a bearer instrument that could be transferred in two ways: by delivery of possession or by written assignment. See Ala.Code 1975, § 8–5–24 (‘The transfer of a ․ note given for the purchase money of lands, whether the transfer be by delivery merely or in writing, expressed to be with or without recourse on the transferor, passes to the transferee the lien of the vendor of the lands.’); Kevin M. Hudspeth, Clarifying Murky MERS: Does Mortgage Electronic Registration Systems, Inc., Have Authority to Assign the Mortgage Note in a Standard Illinois Foreclosure Action?, 31 N. Ill. U.L.Rev. 1, 14 (2010) (stating that ‘a plaintiff in a mortgage foreclosure action obtains the right to enforce the note in one of two primary ways: (1) through proper assignment ․, or (2) through negotiation under the U[niform] C[ommercial] C[ode]’).
“ ‘Ownership of a contractual obligation can generally be transferred by a document of assignment; see Restatement, Second, Contracts § 316 [ (1981) ]. However, if the obligation is embodied in a negotiable instrument, a transfer of the right to enforce must be made by delivery of the instrument; see [former] U.C.C. § 3–202 (1995).’
“Restatement (Third) of Property: Mortgages § 5.4, cmt. b. at 381.”
Coleman v. BAC Servicing, 104 So.3d 195, 203–04 (Ala.Civ.App.2012).
As the main opinion indicates, the record on appeal contains a blank indorsement to EverHome of the note executed by Gray and secured by the mortgage.3 My review of the evidence in the record indicates that Fannie Mae failed to present evidence as to whether EverHome was in possession of the note that was indorsed in blank. Murdock's affidavit speaks only in terms of certain actions being taken by some unspecified entity—perhaps EverHome, although this court may not so speculate—in seeking to accelerate Gray's debt and foreclose based on the purported assignment of the mortgage from MERS to EverHome. EverHome might have been in possession of the promissory note at the time it foreclosed; however, Fannie Mae failed to make a prima facie showing in support of its summary-judgment motion that EverHome was in possession of the note.
Fannie Mae attempted to base its prima facie case in support of ejectment on its claim that it had a valid foreclosure deed. However, Fannie Mae failed to present prima facie evidence demonstrating that EverHome had the authority to foreclose and to issue the foreclosure deed. Accordingly, I conclude that Gray has demonstrated on appeal that the trial court erred in entering a summary judgment in favor of Fannie Mae.
1. In considering this issue, I do not address the argument raised by Gray that some portions of Fannie Mae's evidence was not admissible under Rule 56, Ala. R. Civ. P.
2. In support of its summary-judgment motion, Fannie Mae submitted the affidavit of Robin Murdock, the “Vice President for Everbank sbm Everhome.” In his affidavit, Murdock stated that, “[o]n May 10, 2007, Irwin Mortgage Corporation executed an Assignment of Mortgage to EverHome Mortgage Company (aka EverBank). A copy of the Assignment of Mortgage is attached as ‘Exhibit C.” ’ The exhibit to which Murdock referred in his affidavit was the May 10, 2007, purported assignment from MERS, as nominee for Irwin Mortgage Company, to EverHome. Fannie Mae submitted no other evidence tending to indicate that Irwin Mortgage Company had executed an assignment of Gray's mortgage to EverHome.
3. A “blank indorsement” is “an indorsement that names no specific payee, thus making the instrument payable to the bearer and negotiable by delivery only.” Black's Law Dictionary 844 (9th ed.2009).
PITTMAN, MOORE, and DONALDSON, JJ., concur. THOMPSON, P.J., concurs in the result only, with writing, which THOMAS, J., joins.