ATLANTA -- Georgia's highest court on Monday ruled in favor of JPMorgan Chase Bank in a foreclosure and eviction case involving a home on Crescent Walk Lane in Suwanee.
At issue was whether the bank had to hold both the promissory note and the deed in order to foreclose. Chief Justic Carol Hunstein wrote the unanimous decision that the bank did not have to hold both.
"After careful analysis, we conclude that current law does not require a party seeking to exercise a power of sale in a deed to secure debt to hold, in addition to the deed, the promissory note evidencing the underlying debt," the opinion said.
The court also concluded that the state law that governs this notice must be given to the debtor. That requirement is that the notice identify "the individual or entity (with) full authority to negotiate, amend, and modify all terms of the mortgage with the debtor."
The case involved Chae Yi You and Chur K. Back, who purchased the home in 2003 through a loan from Excel Home Loans. But the home was listed for sale at a foreclosure auction in August, 2011 by Chase Manhattan Mortgage Corporation, after it was assigned the security deed from Excel, and later merged with JPMorgan Chase Bank.
In a notice of sale, the principal amount of the home was listed at $185,000.
Chase then transferred its interests in the property to the Federal National Mortgage Association, also known as "Fannie Mae."
Fannie Mae then started "dispossessory" proceedings against You and Back, and they were evicted from the property in November, 2011 by the Gwinnett County Marshall's Department.
The opinion is in response to three questions sent to the state Supreme Court by the United States District Court for the Northern District of Georgia regarding Georgia's law on foreclosure. The questions were: "Can the holder of a security deed be considered a secured creditor who may initiate foreclosure proceedings" even if it doesn't hold a note on the property. And does state law require that a secured creditor be identified in a foreclosure notice.
The district court also cited a lack of any "clear controlling precedents."
David Ates, the attorney for You and Back, previously argued that the holder of a security deed who does not have interest in debt obligation cannot be a secured creditor, and therefore lacks the authority to conduct non-judicial foreclosures.
You and Back contend that the foreclosure was invalid because Chase didn't hold the promissory note on the property during the foreclosure.
The attorneys for Chase disagreed, and said every district court judge in the 11th Circuit except one agrees with that position.