COURT ERRED IN HOLDING THAT WELLS FARGO FAILED TO PROVE ITS CAPACITY TO SUE FOR NON-JUDICIAL FORECLOSURE

Wells Fargo Bank, N.A. v. Kingman Holdings, LLC
Dallas Court of Appeals, No. 05-17-01240 (January 17, 2019)
Justices Schenck, Reichek (opinion linked here), and Nowell
The Woomers’ home mortgage went through several assignments before they defaulted on their payments in 2016. The only contested issue in this declaratory judgment action was Wells Fargo’s capacity to bring suit to establish its lien and to proceed with a non-judicial foreclosure on the property as trustee for Lehman ABS Mortgage Loan Trust 2007-1, Mortgage Pass-Through Certificates, Series 2007-1. Wells Fargo introduced several documents proving its capacity, including copies of the note, the security instrument, and documents showing the chain of assignments of the security instrument from the original mortgage holder to Wells Fargo. In an attempt to contest Wells Fargo’s capacity to bring suit, Kingman Holdings (which had purchased the home subject to the mortgage) submitted an “attestation” by a records and information management specialist for the Securities and Exchange Commission that “[a] diligent search has this day been made of the records and files of this Commission, and the records and files do not disclose that any filings have been received in this Commission under the name of Lehman ABS Mortgage Loan Trust 2007-1, or Lehman ABS Mortgage Loan Trust 2007-1, Mortgage Pass-Through Certificates, Series 2007-1, pursuant to any of the Acts administered by the Commission.” Kingman argued the attestation showed that the trust of which Wells Fargo claimed to be trustee did not exist “or at least [was] not found in the records of the Securities and Exchange Commission.” The trial court found Wells Fargo had failed to meet its burden to prove capacity and entered judgment against Wells Fargo.

The Dallas Court of Appeals disagreed. It held that Kingman had failed to show Wells Fargo was required to make any filings with the SEC or that the lack of any filings with the SEC prevented Wells Fargo from bringing suit on behalf of the trust. Absent such proof, the attestation was meaningless, and Wells Fargo’s evidence that it was the last entity to which the security interest was assigned was sufficient to conclusively show it had capacity to bring the action. So the appellate court reversed the trial court and rendered judgment declaring that Wells Fargo has a valid and subsisting superior lien on the property.

Print