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In re Allen

June 8, 2012


Appeal from the United States Bankruptcy Court for the Eastern District of Washington Bk. No. 11-01152

The opinion of the court was delivered by: Honorable Patricia C. Williams, Bankruptcy Judge, Presiding



Argued and Submitted on May 16, 2012 at Pasadena, California

Ordered Published - June 14, 2012

Before: PAPPAS, DUNN and HOLLOWELL, Bankruptcy Judges.

PAPPAS, Bankruptcy Judge

Chapter 13 *fn1 debtors Arnold John Allen, Jr. and Kimberly Faith Allen (the "Allens") appeal the bankruptcy court's order overruling their objection to the claim of U.S. Bank, National Association ("USB"). We AFFIRM.


According to the documentary evidence admitted without objection in the record of the bankruptcy court, the following facts and transactions of relevance to this appeal occurred.

On April 24, 2006, the Allens executed a promissory note (the "Note") in the amount of $164,000 in favor of Dream House Mortgage Corporation ("DHMC"). An endorsement in blank appears on the third page of the Note, which reads, "Pay to the Order of; Without Recourse, By [signed initial "J"] John C. Pointe, President, Dream House Mortgage Corporation." There is also an allonge attached to the Note reciting substantially the same information, but with the addition of a date, April 28, 2006.

The Note was secured by a recorded deed of trust ("DOT") executed by the Allens on their property in Newport, Washington (the "Property"). In the DOT, Mortgage Electronic Registration Systems, Inc. ("MERS") is named as the grantee and nominee for DHMC.

On May 31, 2006, the president of DHMC executed a "Lost Note Affidavit and Agreement" (the "Lost Note Affidavit"). The Lost 1 Note Affidavit recites, among other things, that DHMC "was the 2 current holder of the indebtedness evidenced by the" Note; the 3 original Note had been lost, and attached to the allonge was a 4 photocopy of the original in its files; and pursuant to a Mortgage 5 Loan Sale Agreement ("MLSA") dated May 3, 2002, DHMC had "assigned 6 all its rights, title and interest in and to the Mortgage Loan 7 identified below [the Loan]" to DLJ Mortgage Capital Inc. ("DLJ"). 8 On September 1, 2006, DLJ entered into a Pooling and 9 Servicing Agreement ("PSA") that established the CSAB Mortgage- 10 Backed Pass-Through Certificates, Series 2006-1. The parties to 11 the PSA were Credit Suisse First Boston Mortgage Securities Corp. 12 ("Credit Suisse"), the Depositor; DLJ, the Seller; Wells Fargo 13 Bank N.A. ("Wells Fargo") as Servicer, Master Servicer and Trust 14 Administrator; Washington Mutual Mortgage Securities Corp. 15 ("WaMu") as Servicer; Select Portfolio Servicing, Inc. [later 16 known as America's Servicing Co.]("ASC") as Servicer; and USB as 17 Trustee. The PSA provided for the transfer of the Note from DLJ 18 to USB as Trustee under the PSA. To implement this transaction, 19 DLJ first transferred the Note to Credit Suisse, the Depositor, 20 and then Credit Suisse assigned the Note to USB, the Trustee.

21 Section 201(a) of the PSA provides in part:

22 [Credit Suisse] hereby sells, transfers, assigns, delivers, sets over and otherwise conveys to [USB] for 23 the benefit of the Certificateholders and the Certificate Insurer, without recourse, [Credit Suisse's] 24 right, title and interest in and to (a) the Mortgage Loans listed in the Mortgage Loan Schedule ["MLS"].

The MLS *fn2 attached to the PSA lists the Property, identified by the owner "Allen," and the same address listed in the Allens' bankruptcy schedules.

"Mortgage Loans" is a defined term in the PSA Article I; the term includes "related Mortgage Notes." Section 201(d) of the PSA provides that, "It is the express intent of the parties to this Agreement that the conveyance of the Mortgage Loans by [Credit Suisse] to [USB] be construed as a sale of the Mortgage Loans by [Credit Suisse] to [USB]." In addition, the PSA states in § 12.04(a) that:

It is the express intent of [Credit Suisse], [DLJ], [Wells Fargo, WaMu], and [USB] that (I) the conveyance by [DLJ] of the Mortgage Loans to [Credit Suisse] pursuant to the Assignment and Assumption Agreement and iv) the conveyance by [Credit Suisse] to [USB] as provided for in Section 2.01 of each of [DLJ's] and [Credit Suisse's] right, title and interest in the Mortgage Loans be, and be construed as, an absolute sale and assignment by [DLJ] to [Credit Suisse] and by [Credit Suisse] to [USB].

PSA §§ 201(b)(I) and 206 confirm the actual delivery and receipt of the Lost Note Affidavit from DLJ to Credit Suisse, and to USB. PSA §§ 3.01-3.03 provide that Wells Fargo and ASC have authority to service, administer, enforce and foreclose the Mortgage Loans to protect the interests of the trust "in the same manner as it protects its own interests in mortgage loans in its own portfolio[.]" The PSA was signed by officers of each of the parties.

1 The Allens filed a petition for relief under chapter 13 on 2 March 9, 2011. Their schedules listed no secured creditors, the 3 value of the Property as $180,000, and total unsecured debt of 4 $358,072.31. Two days later, the Allens filed a proposed 5 chapter 13 plan which did not provide for any payment to secured 6 creditors.

7 Wells Fargo filed a secured proof of claim in the Allens' 8 bankruptcy case on March 31, 2011 in the amount of $204,526.95 9 (the "Wells Fargo Claim"). The Allens objected to the Wells Fargo 10 Claim, arguing that Wells Fargo was not the lender, that the 11 allonge was not attached to the Note that was attached to the 12 Wells Fargo claim, and consequently, appeared to have been created 13 after the Note, and that ...

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