Hogan v. Wash. Mut. Bank, N.A

In Hogan v. Wash. Mut. Bank, N.A., 230 Ariz. 584, 585,1, 277 P.3d 781, 782 (2012), the plaintiff sued to enjoin trustees' sales unless the beneficiaries proved that they were entitled to collect on the respective notes. Id. at3. The court recognized that a deed of trust could be enforced only by one having the right to enforce the underlying obligation, but rejected the argument that the enforcing party had the burden of demonstrating its rights before a non-judicial foreclosure sale could occur. Id. at 586,6, 277 P.3d at 783. The court noted that non-judicial foreclosures were intended to be quick, efficient, and outside of the judicial process, and that requiring the beneficiary to prove ownership of a note to defaulting trustors before instituting non-judicial foreclosure proceedings might again make the mortgage foreclosure process . . . time-consuming and expensive, and re-inject litigation, with its attendant cost and delay, into the process. Id. at 587,12, 277 P.3d at 784. The Arizona Supreme Court held that "Arizona's non-judicial foreclosure statutes do not require the beneficiary of a deed of trust to prove its authority" or to show possession of the original promissory note "before the trustee may commence a non-judicial foreclosure." Id. The supreme court acknowledged that "a deed of trust, like a mortgage, may be enforced only by, or in behalf of, a person who is entitled to enforce the obligation the mortgage secures." Id. at 586,6, 277 P.3d at 783. However, because the borrower/trustor in Hogan never affirmatively alleged the trustee(s) lacked the authority to conduct a trustee's sale, the supreme court did not address this issue in its decision. Id. at 586,6-7, 277 P.3d at 783 (explaining that it was important to the court's analysis that "Hogan had not alleged that WaMu and Deutsche Bank are not entitled to enforce the underlying note," and that the complaint had not "affirmatively alleged that WaMu and Deutsche Bank are not the holders of the notes in question or that they otherwise lack authority to enforce the notes").