A federal appeals court ruling illustrates why challenges to robo-signed mortgage assignments usually fail in foreclosure defenses.

A Texas couple defaulted on their $360,000 home-equity loan, and the purported holder of the deed of trust, Deutsche Bank, sought a judicial order authorizing foreclosure.  But the homeowners discovered that not one but two assignments of their mortgage had been robo-signed, and sought to have the foreclosure stopped on the grounds that the robosigned assignments were void and the bank therefore lacked standing to foreclose.

For the first assignment, a person purporting to act as the "authorized agent" of Citi Residential Lending, Inc., attorney-in-fact for Argent, executed an instrument assigning the deed of trust "to Deutsche Bank. . ., as Trustee, in trust for the registered Holders of Argent Securities Inc., Asset-Backed Pass-Through Certificates, Series 2006-M1." The signor was actually an employee of Citi Residential Lending, not Argent, and the assignment was allegedly robo-signed.

A Mr. Brian Bly executed the second assignment, assigning the deed of trust to Deutsche Bank, purporting to act in his capacity as "Vice President" of "Citi Residential Lending, Inc., . . . attorney-in-fact for Argent." Unlike the first assignment, however, the second instrument also expressly transferred "the certain note(s) described [in the deed of trust] together with all interest secured thereby, all liens, and any rights due or to become due thereon." Mr. Bly acknowledged his signature before a Florida notary and the instrument was e-filed and e-recorded a year after the first assignment.  Bly in fact worked for a third-party contractor, Nationwide Title Clearing, and in a deposition taken in another case, Bly indicated that his signature was simply scanned onto documents and then notarized as an original and recorded.

The two mortgage assignments were duplicative... the second assignment was evidently recorded because the bank was concerned that the first one was insufficient, perhaps because it did not explicitly mention the note.  The court ruled that the first one was sufficient, but commented on both assignments anyway.  Both were sufficient for the foreclosure to go forward, the court ruled.

The second assignment with the scanned signature was the more questionable one.  The homeowners called it a forgery, signed by an employee of a third party contractor fraudulently claiming to be a vice president of a lender.  But courts in Texas have ruled that a contract (e.g. a mortgage assignment) executed on behalf of a corporation by a person fraudulently purporting to be a corporate officer is not automatically void-- the defrauded party (the corporation) has the option to void it but does not have do so, and if they do not elect to void the contract, it stands.  Only Citi Residential Lending could void the mortgage assignment, and obviously they did not do so, so the assignment stood, even if the signor Bly had no authority to sign it.

That the signature was scanned onto documents rather than written in wet ink, and then notarized as an original also did not void the assignment.  Texas recognizes typed, stamped, or scanned signatures, as long as they are rendered by or at the direction of the signer, the court ruled.  The homeowners did not challenge the notarization on other grounds, but the court found that even if the acknowledgment on the assignment was improper, the foreclosure could have gone forward, because while assignments must be properly acknowledged to be recorded, Texas's recording statute did not protect the homeowners, because the homeowners had actual knowledge of the mortgage.   THe recording statute only protects third parties who do not have actual knowledge of the mortgage.