Nelson v. Fed. Nat'l Mortg. Ass'n

• Court: Alabama Court of Civil Appeals
• Writing for the Court: PER CURIAM.
• Citation: Nelson v. Fed. Nat'l Mortg. Ass'n, 97 So.3d 770 (Ala. Civ. App. 2012)
• Decision Date: 11 May 2012
• Docket Number: 2100842.
• Parties: Andinaria NELSON and Tarrance Nelson v. FEDERAL NATIONAL MORTGAGE ASSOCIATION.

97 So.3d 770

Andinaria NELSON and Tarrance Nelson

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION.

2100842.

Court of Civil Appeals of Alabama.

May 11, 2012.

Kenneth J. Lay, Birmingham, for appellant.

Alan M. Warfield and Mary Colleen B. Beers of Jones, Walker, Waechter, Poitevent, Carrère, & Denègre, L.L.P., for appellee.

PER CURIAM.

Andinaria Nelson and her husband, Tarrance Nelson, appeal from a summary judgment in favor of Federal National Mortgage Association (“Fannie Mae”) in an ejectment action. We vacate the judgment and dismiss the appeal.

Facts and Procedural History

On October 8, 2007, Mrs. Nelson, in consideration for a loan of $114,000 from Global Lending Group, Inc. (“Global”), executed a promissory note agreeing to repay Global in monthly installments over a 30–year period. On the same day, Mr. and Mrs. Nelson executed a mortgage to Mortgage Electronic Registration Systems, Inc. (“MERS”), acting solely “as a nominee for [Global] and [Global's] successors and assigns.” Also on the same day, Mrs. Nelson signed a document acknowledging that she had received a “Notice of Assignment, Sale, or Transfer of Servicing Rights,” informingher that “the servicing of [her] mortgage loan, that is, the right to collect payments from [her], [would be] assigned, sold, or transferred from [Global] to Flagstar Bank, FSB, effective December 1, 2007.”

The Nelsons failed to make the payments due on the mortgage indebtedness and Flagstar Bank, FSB (“Flagstar”), sent them notices of default on January 17, March 18, and May 17, 2008, along with loss-mitigation pamphlets entitled “How to Avoid Foreclosure.” The Nelsons responded with information regarding their financial status. On August 28, 2008, an attorney retained by MERS notified the Nelsons via a mailed letter that Flagstar was accelerating the maturity date of the loan and initiating foreclosure proceedings, with a foreclosure sale scheduled for October 2, 2008. Newspaper notices published on September 6, September 13, and September 20, 2008, stated, in pertinent part:

“Default having been made in the payment of the indebtedness secured by that certain mortgage executed by [the Nelsons] to [MERS], solely as nominee for [Global] on the 8th day of October, 2007, said mortgage having been recorded in the office of the Judge of Probate of Jefferson County, Alabama, in Book: LR 200765, page 7255 and re-recorded in LR 200765, page 17347; said mortgage having subsequently been transferred and assigned to [MERS], solely as nominee for [Flagstar], the undersigned [MERS], solely as nominee for [Flagstar], as mortgagee/transferee, under and by virtue of the power of sale contained in said mortgage, will sell at public outcry to the highest bidder for cash, in front of the main entrance of the Courthouse at Birmingham, Jefferson County, Alabama, [property description]....”

(Emphasis added.) Before the third notice was published, Flagstar entered into a forbearance agreement with the Nelsons, reducing their mortgage interest rate from 7.5% to 5% and setting up a modified payment plan to allow them to bring their loan to a current status.

By March 2009, the Nelsons were again in default on their obligations under the note and mortgage. On March 17, 2009, Flagstar sent the Nelsons a notice of default and a loss-mitigation pamphlet. Mrs. Nelson provided Flagstar with the information it requested in order to consider her for a loss-mitigation program. On June 5, 2009, an attorney retained by MERS notified the Nelsons via a mailed letter that Flagstar was accelerating the maturity date of the loan and initiating foreclosure proceedings, with a foreclosure sale scheduled for July 27, 2009. Newspaper notices were published on June 6, June 13, and June 20, 2009. In early July 2009, however, the Nelsons were approved for a trial Home Affordable Modification Plan (“HAMP”), and the Nelsons signed a HAMP agreement requiring them to make three consecutive reduced payments in a timely manner. On September 21, 2009, a notice postponing the foreclosure sale to November 23, 2009, was published. On September 22, 2009, Flagstar sent the Nelsons a notice of default, again attaching loss-mitigation information. On November 23, 2009, an attorney for MERS informed the Nelsons that the foreclosure sale was being postponed until January 25, 2010, under the same terms as set forth in the previous foreclosure-sale notices. On November 28, 2009, a notice postponing the foreclosure sale to January 25, 2010, was published in the Alabama Messenger.

On January 25, 2010, MERS, as nominee for Flagstar, conducted a foreclosure sale of the Nelsons' property. MERS purchased the property and received a foreclosuredeed. On January 27, 2010, MERS conveyed its interest in the property to Fannie Mae by special warranty deed. The deed was recorded in the Jefferson Probate Office on February 15, 2010.

On February 5, 2010, Fannie Mae filed a complaint alleging that it was the owner of the property by virtue of its special warranty deed from MERS and seeking to eject the Nelsons from the property. The Nelsons answered, denied the material allegations of the complaint, and asserted the affirmative defense that the foreclosure deed was void and that Fannie Mae had no right to eject them from the property because, they claimed, the foreclosure was “wrongful.” ¹ Following discovery, Fannie Mae moved for a summary judgment. In support of that motion, Fannie Mae submitted copies of the note, the mortgage, the foreclosure deed to MERS, its own special warranty deed from MERS, and the affidavit of Sharon Morgan, an assistant vice president of Flagstar. Morgan stated that she had reviewed Flagstar's records concerning the Nelsons' loan and that she had personal knowledge of the facts set forth in her affidavit. Morgan authenticated the pertinent documents, including the note, the mortgage, the “Notice of Assignment, Sale, or Transfer of Servicing Rights [from Global to Flagstar],” the series of loss-mitigation documents that Flagstar and the Nelsons had exchanged, the notice-of-default letters that Flagstar had mailed to the Nelsons, and the notice-of-acceleration letters that attorneys for MERS had mailed to the Nelsons.

With respect to the promissory note that Mrs. Nelson had executed in favor of Global on October 8, 2007, Morgan authenticated Flagstar's copy of the note, which had been stamped with the following undated special indorsement:

“Pay to The Order of

Flagstar Bank, FSB

Without Recourse

Global Lending Group, Inc.

By: /s/ Janice Hopkins

Loan Operations Associate”

The materials attached to Morgan's affidavit did not include any assignment of the mortgage.

In response to Fannie Mae's summary-judgment motion, the Nelsons presented their own affidavits and argued that MERS could convey to Fannie Mae only the interest in the property that MERS had, and, they contended, MERS had no interest in the property because its foreclosure deed was void; accordingly, they said, Fannie Mae did not have standing to seek possession of the property. The Nelsons based their contention that the foreclosure deed was void on the undisputed fact that there had been no assignment of the mortgage from the entity “MERS, as nominee for Global,” either to Flagstar or to the entity “MERS, as nominee for Flagstar,” and offered the following arguments: (1) that the power-of-sale provision in the mortgage instrument was unenforceable because the note and mortgage had been separated; (2) that MERS and the loan servicer, Flagstar, had breached the notice requirements in the mortgage instrument and had failed to follow the statutory notice requirements of § 35–10–13, Ala.Code 1975; and (3) that Flagstar had failed to comply with its loss-mitigation program and had misrepresented that the foreclosure would not occur as long as Flagstar was working with the Nelsons to help them keep the property. Finally, the Nelsons argued that Fannie Mae's summary-judgment motion was not supported by admissible evidence under Rule 56, Ala. R. Civ. P. Specifically, they contended that Morgan's affidavit was not based on personal knowledge and was not accompanied by sworn or certified copies of the documents to which it referred.

Fannie Mae filed a reply to the Nelsons' response, arguing that the Nelsons had contractually authorized MERS to foreclose on the property, in the event of their default, when they signed the mortgage instrument, which instrument contained the following provisions:

“Borrower irrevocably mortgages, grants and conveys to MERS (solely as nominee for Lender and Lender's successors and assigns) and to the successors and assigns of MERS, with power of sale, [the Property].

“... Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property.”

(Emphasis added.)

Following oral argument on the motion, the trial court entered a summary judgment in favor of Fannie Mae on January 18, 2011, setting out the reasons for its decision. The trial court's determination can be summed up by the following excerpt from its judgment:

“[Mrs.] Nelson admitted in her affidavit that she was sending payments to Flagstar. [The Nelsons have] not submitted any evidence, let alone substantial evidence, to show that Flagstar was not the ‘successor or assign’ of the ‘lender’ as defined in the mortgage. An assignment of mortgage from MERS to Flagstar was unnecessary for MERS to proceed with the foreclosure on behalf of Flagstar under the power of sale in the mortgage. All that was required was that Flagstar be entitled to the debt secured by the mortgage as the successor or assign of the ‘lender.’ ”

The Nelsons filed a motion to alter, amend, or vacate the judgment on ...