You v. JP Morgan Chase Bank

May 20, 2013

By: Glen Rubin, Managing Partner

Earlier today, the Supreme Court of Georgia issued a ruling that should help resolve much of the ambiguity surrounding foreclosures in the Peach State and will make it significantly easier to defend much of the present consumer litigation.   In deciding the case of You v. JP Morgan Chase Bank, N.A., the Court specifically answered questions that were certified to it by a federal judge.  The federal judge noted that there was a rash of wrongful foreclosure litigation that had spawned in federal courts here. Although most of the cases tended to be decided in the favor of the foreclosing lender, the federal courts were not uniform in their interpretation of Georgia law.

The Supreme Court first held that a party seeking to foreclose non-judicially is not required to hold the Note in addition to the Security Deed or Deed to Secured Debt (security instruments in Georgia).  This dispels a popular defense asserted by borrowers regarding a lender’s ability to foreclose.  The next issued resolved had to do with the content of foreclosure notices. Borrowers had been advancing a theory that Georgia foreclosure law required the foreclosure notices to correctly state who the “secured creditor” was.  The Court held that no such requirement existed and that the foreclosure notices are only required to identify “the individual or entity with full authority to negotiate, amend or modify all terms of the mortgage with the Debtor.”  In concluding its opinion the Court was clearly wary of how its decision would be interpreted. While taking note of the current foreclosure crisis and the plight of many borrowers facing foreclosure, the Court noted that it could only interpret the laws as written and not legislate on their behalf.

Also of note, based upon this decision, the Supreme Court of Georgia in a separate ruling today also vacated the Court of Appeals ruling in Reese v. Provident Funding Associates, LLP that caused uncertainty and disruption in Georgia foreclosures last summer.