Georgia Borrowers No Longer Have Standing to Challenge Assignments

The question of whether a borrower can challenge an Assignment of Mortgage has been a hotbutton issue throughout Georgia the last several years, prompting countless lawsuits seeking to enjoin or rescind foreclosure sales. The Georgia Supreme Court recently provided much-needed clarity in Ames v. JP Morgan Chase Bank, NA, 783 S.E.2d 614 (Ga. 2016).

In Ames, the borrowers filed both state and federal lawsuits alleging that the assignment of the subject Security Deed was invalid. The Georgia Court of Appeals ruled that the Ameses lacked standing based on a string of Georgia opinions supporting the conclusion. The Georgia Supreme Court affirmed this, holding that the Security Deed does not afford a borrower any rights to dispute an assignment to a third party; an assignment does not breach any duty owed to a borrower under state law or the terms of the Security Deed, and the assignment itself does not
grant a borrower any new rights.

The primary basis for the last holding is that an assignment “is a contract between the deed holder and the assignee” (Ames at 620, quoting Bank of Cave Spring v. Gold Kist, Inc., 173 Ga. App. 679, 680 (1985)). The borrower, of course, is rarely the deed holder or the assignee and, as such, lacks standing to challenge the assignment even if the assignment affects the debtor in some ways.

The end result in Georgia is that in most cases, the borrower cannot attack the assignment. If a borrower files a lawsuit raising this lone issue in an attempt to delay a foreclosure sale, lenders and services should contact their legal counsel to determine whether the sale must be canceled in light of Ames.

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