Bradsen v. Shellpoint Mortg. Servs.

505 P.3d 1109

Allixandra Karenn BRADSEN, Appellant,

v.SHELLPOINT MORTGAGE SERVICES and Saxon Mortgage Services Inc., Appellees.

No. 20200244-CA

Court of Appeals of Utah.

Filed January 21, 2022

David D. Jeffs, Provo, Attorney for Appellant

Alex B. Leeman, Salt Lake City, Attorney for Appellee Shellpoint Mortgage Services

Stephen G. Stoker, Salt Lake City, Attorney for Appellee Saxon Mortgage Services Inc.

Judge Jill M. Pohlman authored this Opinion, in which Judges Gregory K. Orme and Ryan M. Harris concurred.

Opinion

POHLMAN, Judge:

¶1 In 2007, Allixandra Karenn Bradsen refinanced the mortgage on her house by obtaining a loan secured by a trust deed on the property. Two years later, Bradsen stopped making payments on the loan and, for more than a decade, she has worked to forestall its collection and to prevent foreclosure on the property. As part of her efforts, Bradsen filed the present lawsuit, alleging that Shellpoint Mortgage Services,¹ the entity claiming to currently hold the note and trust deed, does not have standing to foreclose on the property because it does not hold good title. She also alleges that collection on the note and foreclosure on the property are time-barred.

¶2 The district court disagreed with Bradsen. In granting summary judgment in favor of Shellpoint, it concluded that Shellpoint had demonstrated an unbroken chain of title that proved it is the rightful owner of the note and beneficiary of the trust deed. The court also determined that the six-year statute of limitations had not expired because Bradsen restarted the limitations period by acknowledging her debt when she applied for mortgage relief in 2014.

¶3 On appeal, we agree with the district court that Bradsen revived the statute of limitations by acknowledging her debt, but we disagree with the court's analysis relevant to the chain of title. Accordingly, we vacate the district court's award of summary judgment in favor of Shellpoint and remand for further proceedings.

BACKGROUND²

The Note and Deed of Trust

¶4 In June 2007, Bradsen received a loan from Sand Canyon Corporation³ by executing an adjustable rate note. As collateral for the loan, Sand Canyon took a security interest in Bradsen's property as evidenced by a trust deed that identified Sand Canyon as the beneficiary. The next month, Sand Canyon assigned the trust deed to Saxon Mortgage Services Inc. (the 2007 Assignment).

Bradsen's Default

¶5 Because Bradsen stopped making payments on the loan in March 2009, Saxon executed a Notice of Default and Election to Sell and recorded that document at the county recorder's office (the First Notice). In the First Notice, Saxon accelerated all payments due under the note and invoked its option to foreclose on the property under the trust deed. In response, Bradsen filed a lawsuit in federal court attempting to void the note and trust deed, alleging that the loan had violated the federal Truth in Lending Act (TILA).⁴ See generally 15 U.S.C. §§ 1601 to 1667f.

The Purported Assignment to RCS

¶6 Ultimately, Saxon did not seek to collect on the note or foreclose under the trust deed. Instead, it sent Bradsen a letter in May 2012, informing her that "the servicing of [her] mortgage loan will be transferred from Saxon ... to Residential Credit Solutions, Inc." (RCS) and that her "new servicer will be [RCS]."

¶7 In July 2013, the trust deed was purportedly assigned to RCS, but the assignment (the 2013 Assignment) listed "Sand Canyon Corporation f/k/a Option One Mortgage Corporation" as the assignor, not Saxon. Sand Canyon was identified on the signature line of the 2013 Assignment and it was signed by its assistant secretary.

Bradsen's Request for Loan Modification

¶8 The next year, on January 22, 2014, Bradsen wrote to RCS asking for a loan modification. She explained, "I write this letter regarding my reason for my late payments on my mortgage loan and to request a workout in order to prevent my home from going into default and foreclosure." She identified her "original loan amount" as $258,400 and stated that when she refinanced with Sand Canyon, her loan ballooned "to over $400 thousand." She also identified what she referred to as "[m]y payment" as $2,409.02 per month.

¶9 Bradsen further explained that she had filed her federal lawsuit "to see if the loan could be cancelled" due to TILA violations, but that her lawyer had withdrawn from the case and that she was now "appealing to [RCS] for what [she] wanted in the first place, to modify [her] loan to make [her] mortgage payment more affordable." She then stated, "I am willing to dismiss any litigation actions that have been taken in my behalf, but have been afraid to before someone can look at my matter."

¶10 In addition to her letter, Bradsen submitted to RCS a signed Uniform Borrower Assistance Form seeking mortgage relief under the federal government's Making Home Affordable program. In the form, she repeatedly refers to herself as "Borrower" and acknowledged that the purpose of her application was to obtain "mortgage relief" or "mortgage assistance" under her "existing mortgage." She also referred to her outstanding debt as "my loan."

The Rescission of the 2007 Assignment

¶11 In September 2017, Sand Canyon executed and recorded a Rescission of Assignment of Deed of Trust (the Rescission). In the Rescission, Sand Canyon stated that it, when known as Option One, "erroneously filed" the 2007 Assignment assigning the trust deed to Saxon.⁵ The Rescission further declared that the 2007 Assignment was thereby "withdrawn, canceled and declared of no force or effect, and that the lien on the [Bradsen] property ... shall in no way be affected by such erroneous instrument."

The Assignment to Ditech and the Ditech Affidavit

¶12 In October 2017, RCS purported to assign the trust deed to Ditech Financial LLC.⁶ The next month, Ditech executed an Affidavit of Lost Assignment (the Affidavit). In the Affidavit, a representative of Ditech averred that "[t]he original assignment of the Mortgage between Saxon ... and Ditech ... has been lost and/or was not recorded."⁷ Ditech further asserted that Saxon "is no longer in business and a replacement assignment is therefore unavailable."

¶13 In December 2017, Ditech executed and recorded a Cancellation of Notice of Default. In the cancellation, Ditech cancelled the First Notice that Saxon had recorded in 2009. On the same day, Ditech executed and recorded its own Notice of Default and Election to Sell (the Second Notice). In the Second Notice, Ditech alleged that Bradsen had defaulted on her "monthly payment obligation set forth in the promissory note"; it also accelerated the amount still due under the note and elected to foreclose on Bradsen's property under the trust deed's terms.

The Correction

¶14 In January 2019, Saxon recorded a Corrected and Restated Assignment of Trust Deed (the Correction). In the Correction, Saxon purported to "correct the assignor identified" in the 2013 Assignment, in which Sand Canyon (years after assigning the trust deed to Saxon) purported to assign the trust deed to RCS. Saxon restated the 2013 Assignment as having been between Saxon and RCS.

The Shellpoint Assignment

¶15 Ditech filed a Chapter 11 bankruptcy action before formally foreclosing on the property. The trust deed was later assigned to Shellpoint during bankruptcy proceedings.

Procedural History

¶16 Before any formal foreclosure proceedings began, Bradsen filed the underlying lawsuit against Shellpoint and Saxon, seeking to enjoin the foreclosure of her property and seeking quiet title of the property in her favor. In November 2018, Shellpoint asserted a counterclaim, alleging that Bradsen was in default of her loan and petitioning the district court for judicial foreclosure and enforcement of the note. Prior to that time, no entity had filed any action to enforce payment on the note or to foreclose on the property.

¶17 Both Bradsen and Shellpoint subsequently moved for summary judgment. In her motion, Bradsen argued that foreclosure on her property was time-barred. Citing Utah Code section 70A-3-118(1), Bradsen asserted that the holder of a note has six years to enforce the note or foreclose under a deed of trust once the holder has accelerated payments due under the note. Because Saxon first accelerated payments under the note on August 20, 2009, Bradsen argued that Shellpoint's attempt to foreclose on her property after August 20, 2015, was unlawful. Further, Bradsen argued that the trust deed should be extinguished because the note could no longer be enforced and that, as a result, "the court should quiet title in and to [the subject property] as against [Shellpoint and Saxon] or any other person" claiming an interest in the subject property under the trust deed.

¶18 In its cross-motion, Shellpoint sought dismissal of Bradsen's quiet title claim and summary judgment in its favor on its counterclaim for judicial foreclosure. Shellpoint asserted that the chain of recorded documents proved that it was the current assignee and beneficiary of the note and trust deed, "with all rights thereunder." In so asserting, Shellpoint acknowledged that Bradsen had questioned Shellpoint's standing, pointing to a break in the chain of title due to the 2013 Assignment, where Sand Canyon (rather than Saxon) purported to assign the deed to RCS. But Shellpoint argued that any such break was retroactively corrected when Saxon executed the Correction in 2019. Further, in response to Bradsen's statute of limitations argument, Shellpoint claimed that Bradsen's application to modify her loan restarted the statute of limitations in 2014. It also argued, alternatively, that even if the statute of limitations had run on enforcement of the note, the trust deed was still valid, allowing for foreclosure of the property.

¶19 Bradsen responded to Shellpoint's standing argument by asserting that Shellpoint was not entitled to summary judgment because it had not shown, as a matter of law, that "it is the owner of the...