The securitization of mortgages presents the issue of standing not only in foreclosure cases but also in the bankruptcy arena. In recent case of In re Maisel, ___ B.R. ___, 2007 WL 4029094 (Bankr.D.Mass. November 15, 2007), reviewed a party's motion for relief from the automatic stay in order to foreclose. The court found that the party did not have the requisite standing at the time the motion was filed as it had not yet obtained an assignment from the original mortgage lender. The Maisel court cited the recent Federal District Court case of In re Foreclosure Cases, 2007 WL 3232430(N.D.Ohio 2007).
In this case, Wells Fargo Bank NA filed a stay relief motion as Trustee for Morgan Stanley Capital I, Inc. Trust 2004-OP1 Mortgage Pass-Through Certificates, Series 2004-OP1. The debtors originally executed a note and mortgage to Option One Mortgage Corporation. Wells Fargo did not attach an assignment to the motion for stay relief but presented it to the court at the hearing. The assignment was dated four days after the filing of the stay relief motion.
The court discussed that section 362(d) requires one to be a "party in interest" to seek relief from the stay. The test for whether one is a party in interest is whether a party has a colorable claim to the property. The court found that Wells Fargo did not have a colorable claim to the property at the time the motion for stay relief was filed. The court further stated that Wells Fargo was a mere unrelated third party that did not have an interest in the mortgage or note until after the motion was filed.
In conclusion, the court gave this direction to lenders, "Lenders must take care in their haste to obtain relief from stay to ensure that the factual statements they make in their motions are true, have evidentiary support and support their claims." Despite the court's position, apparently stay relief was granted as the debtors indicated their intent to surrender the real property.
