In re Carrsow-Franklin

Cynthia Carrsow-Franklin (debtor) went into bankruptcy. In 2010, Wells Fargo Bank, N.A. (Wells Fargo) (creditor) filed a claim as the supposed holder of a loan to Carrsow-Franklin that was secured by a deed of trust. Attached to the claim were (1) a note from the year 2000, payable to Mortgage Factory Inc. and indorsed to ABN Amro Mortgage Group, Inc. (ABN Amro); (2) the deed of trust, also filed in 2000 and assigned from Mortgage Factory to ABN Amro; (3) an assignment of the deed of trust from ABN Amro to Mortgage Electronic Registration System (MERS) as nominee for Washington Mutual Bank, FA, dated 2002; (4) documents from 2008 in which Wells Fargo appeared to obtain approval from the Federal Home Loan Mortgage Corporation, known as Freddie Mac, for modification of the loan; and (5) an assignment of mortgage from MERS to Wells Fargo, signed by John Kennerty on behalf of MERS and dated only three days before the claim itself in 2010. However, Kennerty was also an employee of Wells Fargo, where he worked as part of a team tasked with processing a large volume of loan documents. Carrsow-Franklin challenged Wells Fargo’s standing to assert the claim. In response, Wells Fargo filed a new claim that was identical to the previous one, except that a blank indorsement was added to the copy of the note. The blank indorsement appeared to give Wells Fargo the ability to enforce the note under Texas law. However, Carrsow-Franklin challenged the indorsement’s authenticity, suggesting that Wells Fargo had forged it. At trial, Kennerty’s testimony established that he signed multiple documents per day without really understanding their legal meaning or effect.