Narrative Opinion Summary
In this case, the court addressed the entitlement of an assignee to surplus funds following the foreclosure of a prior mortgage. The assignee, BAC Home Loan Servicing, L.P., sought to recover surplus funds generated after the foreclosure of a property initially mortgaged by the deceased borrower to Citizens Bank, followed by a second mortgage to Quicken Loans. The foreclosure sale resulted in surplus funds after satisfying the debt owed to Citizens Bank. The master initially ruled against BAC, citing the lack of a recorded interest at the time of the sale and issues regarding the legality of the mortgage closing due to the absence of attorney participation. However, the court held that BAC, as the assignee of the second mortgage, was entitled to claim the surplus funds, given that the assignment's validity did not hinge on its pre-sale recording. Furthermore, the court clarified that the absence of attorney involvement in the mortgage closing did not preclude BAC's recovery, as the mortgage was filed before the relevant ruling in the Matrix case. Consequently, the master's decision was reversed, and the surplus funds were awarded to BAC.
Legal Issues Addressed
Effect of Attorney Participation on Mortgage Closing Validitysubscribe to see similar legal issues
Application: The absence of attorney participation in the closing of a mortgage does not bar the assignee from recovering surplus funds if the mortgage was filed before the decision in the Matrix case, which was issued in August 2011.
Reasoning: It also clarified previous rulings, stating that the lack of attorney participation in the closing of the mortgage does not bar the assignee from recovering the surplus if the mortgage was filed before the referenced case.
Impact of Foreclosure Sale on Lien Rightssubscribe to see similar legal issues
Application: The foreclosure sale extinguishes the lien on the property but does not extinguish the right to claim surplus funds from the sale, which can be assigned to another party.
Reasoning: The master also mistakenly asserted that Systems’ lien was extinguished by the foreclosure sale. However, BAC claims an interest in the surplus funds, not a lien on the property.
Recording Requirement for Assignments Under Rule 71(c)subscribe to see similar legal issues
Application: Recording of an assignment is not necessary for the assignee to claim surplus funds, as the assignment's validity is not contingent upon its recording prior to the foreclosure sale.
Reasoning: The master incorrectly concluded that BAC lacked a valid lien because the assignment was recorded post-sale. According to Singleton v. Singleton, the assignment does not need to be recorded to be valid...
Rights of an Assignee to Surplus Funds from Foreclosuresubscribe to see similar legal issues
Application: The court determined that an assignee of a note and mortgage is entitled to surplus funds from the foreclosure of a prior mortgage, even if the assignee was not a recorded lienholder at the time of the sale.
Reasoning: The court ruled that the assignee is entitled to the surplus funds even if it was not a recorded lienholder at the time of the sale.