Bernardo v. National City Real Estate Services, LLC

Summarized by Brooke Schumm , Daneker, McIntire, Schumm, et al.
14 years 9 months ago

Citation:

___ F. 3d ___ (4th Cir. 2011), Slip Op. May 26, 2011, Dkt No. 10-1803

Tag(s):

Ruling:

Applying Virginia law, the Court interpreted the language of the note providing the lender "may transfer this Note" as meaning exactly that: the lender may transfer the note. The note is a negotiable instrument under Va. Code sec. 8.3A-104. Citing law from the 1800's, the deed of trust follows the note. The current holder was entitled to foreclose the property. In an unpublished decision, the Court of Appeals affirmed the district court decision dismissing the borrower's complaint to effectively void the deed of trust and note.

Procedural context:

After a foreclosure had been commenced in Prince William County, Virginia, the debtor filed a four count complaint for Fair Debt Collection Practices Act relief and for declaratory relief that the lender could not foreclose on the property. The foreclosure sale was cancelled, the claims were removed to federal court, and, on a motion to dismiss for failure to state a cause of action, the complaint of the borrower was dismissed by the U.S. District Court for the Eastern District of Virginia. The Court rejected other arguments (not described) on the basis of a similar case Horvath v. Bank of New York, No. 10-1528.

Facts:

Bernardo signed a first promissory note and deed of trust on his property in Manassas, Virginia. He refinanced the note with National City Mortgage Company in 2004 for $330,000.00 and the new note clarified that the "lender 'may transfer this Note' and that the 'Lender or anyone who takes this Note by transfer and who is entitled to receive payments under this Note is called the "Note Holder."'" The deed of trust confirmed these rights. The loan was sold to Freddie Mac and the loan was securitized, and National City and its successor, National City Real Estate Services, LLC ("NCRES") remained the servicing agent. PNC Bank was the successor by merger of NCRES. At trial, PNC Bank produced the original note. The note was endorsed in blank. PNC was the holder of the note and entitled to foreclose.

Judge(s):

Wilkinson, Keenan, and Diaz, Circuit Judges

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