Mortgagor cannot challenge foreclosure because of lack of evidence of valid mortgage assignments

The Nebraska Supreme Court has joined other courts that have held that a bank that holds the mortgage note may foreclose on the property even if there is no evidence of a valid chain of mortgage assignments and some doubt about whether the foreclosing party has the right to foreclose. Marcuzzo v. Bank of the West, 862 N.W.2d 281 (Neb. 2015). The theory is that the holder of the note generally is a person entitled to enforce the note and that, assuming the mortgage note is a negotiable instrument under the Uniform Commercial Code, the holder of the note has the power to enforce it through foreclosure. If the wrong party is foreclosing, the correct party can sue the foreclosing party to recover its money. The homeowner is arguably not harmed because it defaulted on the mortgage and thus lost the right to keep the home. If the only issue is who gets the money, that is of no concern to the homeowner. 

The contrary position has been partially accepted by the Supreme Judicial Court of the Commonwealth of Massachusetts partly because Massachusetts is a title theory state with nonjudicial foreclosure (rather than a lien theory state). See U.S. Bank Nat'l Ass'n v. Ibanez, 941 N.E.2d 40 (Mass. 2011). The SJC held that a party that is taking away another party's property by foreclosure cannot do so unless it provides clear evidence that it has a right to do so. This approach is based on the traditional rule that one cannot dispossess another of real property simply by presenting evidence that the occupying party does not have good title to the land; the dispossessing party must prove a better title than the possessor. A peaceable possessor retains ownership unless someone can prove a better title. A policy argument for this position is that the homeowner may seek to renegotiate the mortgage with the holder the note and it cannot know who to negotiate with if the person who actually owns the right to enforce the note can be clearly identified. See, e.g., Sowder v. McMillan's Heirs, 34 Ky. 456 (Ky. Ct. App. 1836) ("the law protects a peaceable possession, against all except him who has the actual right to the possession").