Showing posts with label MERS. Show all posts
Showing posts with label MERS. Show all posts
Tuesday, December 6, 2011
Saturday, December 3, 2011
Massachusetts Sues Wells & MERS
JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. were among five banks sued by Massachusetts for allegedly conducting unlawful foreclosures and deceiving homeowners, Bloomberg News reported yesterday. Massachusetts Attorney General Martha Coakley filed the lawsuit yesterday against the three banks, as well as Wells Fargo & Co. (WFC) and Ally Financial Inc., accusing the banks of engaging in unfair and deceptive trade practices in violation of state law. http://www.bloomberg.com/news/print/2011-12-01/ma-sues-bofa-citi-jpmorgan-ally-wells-fargo.html and MERS
http://www.dsnews.com/articles/massachusetts-sues-five-largest-servicers-and-mers-2011-12-01
MASS Complaint
http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf
http://www.dsnews.com/articles/massachusetts-sues-five-largest-servicers-and-mers-2011-12-01
MASS Complaint
http://www.mass.gov/ago/docs/press/ag-complaint-national-banks.pdf
Friday, November 25, 2011
MERS- Michigan
The Michigan Supreme Court recently held that MERS, as an "undisputed record holder of a mortgage," has statutory authority to foreclose. (Our prior update regarding the appellate court's opinion in this matter, which the Michigan Supreme Court now reversed, is below.)
A borrower obtained a mortgage loan that provided for rights of foreclosure by the designated Mortgagee, MERS. MERS foreclosed on the property by advertisement, and quitclaimed it to successor lender ("Plaintiff"). The borrower challenged the foreclosure, on the grounds that MERS did not have statutory authority to foreclose under Michigan law.
As you may recall, Michigan law allows a party to foreclose a mortgage by advertisement if, among other things, that party owns an interest in the indebtedness secured by the mortgage. See MCL 600.3204(d)(1).
The lower court rejected the borrower's argument, and borrower appealed.
A Michigan Court of Appeals overruled the lower court's decision, holding that MERS "only held an interest in the property as security for the note, not an interest in the note itself." Accordingly, the Court of Appeals held that MERS did not have authority to foreclose.
The Michigan Supreme Court reversed the Court of Appeals, holding that MERS held an interest in the indebtedness, and therefore had the authority to foreclose.
In so doing, the Court noted that the interest in the indebtedness held by MERS "does not equate to an ownership in the interest in the Note."
Instead, the Court found that "MERS owned a security lien on the properties, the continued existence of which was contingent upon the satisfaction of the indebtedness." Because MERS had an interest in the indebtedness, the Court held that MERS was authorized to foreclose under Michigan law.
The Court further explained that it found no indication that the Michigan Legislature intended to "establish a new legal framework in which an undisputed record holder of a Mortgage, such as MERS, no longer possesses the statutory authority to foreclose." Instead, the Court held that the Legislature's use of the phrase "interest in the indebtedness" includes mortgagees of record, as well as owners and servicers of the debt.
A borrower obtained a mortgage loan that provided for rights of foreclosure by the designated Mortgagee, MERS. MERS foreclosed on the property by advertisement, and quitclaimed it to successor lender ("Plaintiff"). The borrower challenged the foreclosure, on the grounds that MERS did not have statutory authority to foreclose under Michigan law.
As you may recall, Michigan law allows a party to foreclose a mortgage by advertisement if, among other things, that party owns an interest in the indebtedness secured by the mortgage. See MCL 600.3204(d)(1).
The lower court rejected the borrower's argument, and borrower appealed.
A Michigan Court of Appeals overruled the lower court's decision, holding that MERS "only held an interest in the property as security for the note, not an interest in the note itself." Accordingly, the Court of Appeals held that MERS did not have authority to foreclose.
The Michigan Supreme Court reversed the Court of Appeals, holding that MERS held an interest in the indebtedness, and therefore had the authority to foreclose.
In so doing, the Court noted that the interest in the indebtedness held by MERS "does not equate to an ownership in the interest in the Note."
Instead, the Court found that "MERS owned a security lien on the properties, the continued existence of which was contingent upon the satisfaction of the indebtedness." Because MERS had an interest in the indebtedness, the Court held that MERS was authorized to foreclose under Michigan law.
The Court further explained that it found no indication that the Michigan Legislature intended to "establish a new legal framework in which an undisputed record holder of a Mortgage, such as MERS, no longer possesses the statutory authority to foreclose." Instead, the Court held that the Legislature's use of the phrase "interest in the indebtedness" includes mortgagees of record, as well as owners and servicers of the debt.
Tuesday, September 13, 2011
9th Cir Rejects MERS Challenge, Rejects Equitable Tolling Theory Based on Spanish-Language Negotiations, Rejects Borrowers' IIED Claim
The U.S. Court of Appeals for the Ninth Circuit recently ruled in favor of Mortgage Electronic Registration Systems, Inc. ("MERS") in a putative class action challenging the MERS system under common law fraud and state UDAP theories.
The Court also rejected the borrowers' equitable tolling argument as to the TILA and state UDAP statute of limitations, based upon the borrowers speaking only Spanish but their loan documents being only in English. In addition, the Court held that providing an unaffordable loan to a borrower was not "extreme and outrageous" as is required to state a claim for intentional infliction of emotional distress.
A copy of the opinion is available at:
http://www.ca9.uscourts.gov/datastore/opinions/2011/09/07/09-17364.pdf
The three named plaintiffs in the case obtained home loans or refinanced existing loans in 2006. The plaintiffs each executed a deed of trust in favor of their lender, naming MERS as the "beneficiary" and as the "nominee" for the lender and lender's "successors and assigns." The plaintiffs do not speak or read English, and negotiated the mortgage loans with their lenders in Spanish, but were provided with, and signed, copies of their loan documents written in English.
The plaintiffs subsequently defaulted on their loans. Following default, their respective lenders appointed trustees to initiate nonjudicial foreclosure proceedings. MERS's beneficial interests in the deeds of trust were all assigned to a foreclosure trustee.
The plaintiffs filed their putative class action, alleging conspiracy by their lenders and others to use MERS to commit fraud. They also alleged that their lenders violated the federal Truth in Lending Act ("TILA"), and the Arizona Consumer Fraud Act ("ACFA"), and committed the tort of intentional infliction of emotional distress ("IIED") by supposedly targeting the plaintiffs for loans they allegedly could not repay when the loans were extended.
The trial court dismissed the plaintiffs' first amended complaint, without leave to amend. Further, the trial court denied leave to file a proposed second amended complaint, and to add a new claim for wrongful foreclosure.
On appeal, the plaintiffs only addressed the district court's: (1) dismissal of their claim for conspiracy to commit fraud through the MERS system; (2) failure to address their oral request for leave to add a wrongful foreclosure claim; (3) dismissal of the foreclosure trustee from the suit; (4) denial of leave to amend their pleadings regarding equitable tolling of their TILA and ACFA claims; and (5) dismissal of their claim for IIED.
On appeal, the Ninth Circuit noted that the main premise of the plaintiffs' lawsuit was that the MERS system impermissibly "splits" the note and deed of trust by facilitating the transfer of the beneficial interest in the loan among lenders while maintaining MERS as the nominal holder of the deed. The Ninth Circuit rejected this theory.
The plaintiffs' lawsuit was also premised on the fact that MERS does not have a financial interest in the loans, which, according to the plaintiffs, renders MERS's status as a beneficiary a sham. The Ninth Circuit rejected this theory, also.
With respect to the conspiracy to commit fraud claim, the plaintiffs alleged that MERS members conspired to commit fraud by using MERS as a sham beneficiary, supposedly promoting and facilitating predatory lending practices through the use of MERS, and supposedly making it impossible for borrowers or regulators to track the changes in lenders.
In upholding the lower court's ruling that the plaintiffs failed to state a cause of action, the Ninth Circuit held "[t]he plaintiffs' allegations fail to address several of [the] necessary elements for a fraud claim."
Specifically, the plaintiffs failed to identify any false representations made to them about the MERS system, and failed to allege they relied on misrepresentations about MERS in deciding to enter into their home loans.
Moreover, the Ninth Circuit found the plaintiffs' allegations were undercut by the language in the standard deed of trust, which provided that MERS was acting "solely as a nominee for Lender and Lender's successors and assigns" and holds "only legal title to the interest granted by Borrower in this Security Instrument." The Court held that "[b]y signing the deeds of trust, the plaintiffs agreed to the terms and were on notice of the contents." The Court further held that "[i]n light of the explicit terms of the standard deed. . ., it does not appear that the plaintiffs were misinformed about MERS's role in their home loans."
With respect to the wrongful foreclosure claim, the Ninth Circuit held that "[t]he plaintiffs' oral request to add a wrongful foreclosure claim was procedurally improper and substantively unsupported." The plaintiffs based their wrongful foreclosure claim on the novel theory that "all transfers of the interests in the home loans within the MERS system are invalid because the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in a position to foreclose."
The Court rejected this argument, holding "[e]ven if MERS were a sham beneficiary, the lenders would still be entitled to repayment of the loans and would be the proper parties to initiate foreclosure after the plaintiffs defaulted on their loans." The Court further held that "the notes and deeds are not irreparably split: the split only renders the mortgage unenforceable if MERS or the trustee, as nominal holders of the deeds, are not agents of the lenders."
With respect to the allegations against the foreclosure trustee, the Court noted the only allegations the plaintiffs directed against the foreclosure trustee was that the trustee supposedly "failed to recognize that its appointment was invalid." The Ninth Circuit held the plaintiffs failed to state a cause of action, because the trustee had an "'absolute right' under Arizona law 'to rely upon any written direction or information furnished to him by the beneficiary.'"
The plaintiffs also asserted that the district court failed to address the equitable tolling of their purported claims under TILA and the ACFA. The plaintiffs alleged their TILA claim should have been tolled because they only speak Spanish, but received their loan documents in English. The Court disagreed, finding "the plaintiffs have not alleged circumstances beyond their control that prevented them from seeking a translation of the loan documents that they signed and received."
Further, the Court also held that the plaintiffs failed to state a claim for equitable estoppel because they "failed to specify what true facts are at issue, or to establish that the alleged misrepresentation and concealment of facts is 'above and beyond the wrongdoing' that forms the basis for their TILA and [ACFA] claims."
Finally, with respect to the IIED allegations, the Ninth Circuit held the plaintiffs failed to state a cause of action because they "essentially allege that the lenders offered them loans that the lenders knew they could not repay," which was not "extreme and outrageous" as is required to state a claim for IIED.
The Court also rejected the borrowers' equitable tolling argument as to the TILA and state UDAP statute of limitations, based upon the borrowers speaking only Spanish but their loan documents being only in English. In addition, the Court held that providing an unaffordable loan to a borrower was not "extreme and outrageous" as is required to state a claim for intentional infliction of emotional distress.
A copy of the opinion is available at:
http://www.ca9.uscourts.gov/datastore/opinions/2011/09/07/09-17364.pdf
The three named plaintiffs in the case obtained home loans or refinanced existing loans in 2006. The plaintiffs each executed a deed of trust in favor of their lender, naming MERS as the "beneficiary" and as the "nominee" for the lender and lender's "successors and assigns." The plaintiffs do not speak or read English, and negotiated the mortgage loans with their lenders in Spanish, but were provided with, and signed, copies of their loan documents written in English.
The plaintiffs subsequently defaulted on their loans. Following default, their respective lenders appointed trustees to initiate nonjudicial foreclosure proceedings. MERS's beneficial interests in the deeds of trust were all assigned to a foreclosure trustee.
The plaintiffs filed their putative class action, alleging conspiracy by their lenders and others to use MERS to commit fraud. They also alleged that their lenders violated the federal Truth in Lending Act ("TILA"), and the Arizona Consumer Fraud Act ("ACFA"), and committed the tort of intentional infliction of emotional distress ("IIED") by supposedly targeting the plaintiffs for loans they allegedly could not repay when the loans were extended.
The trial court dismissed the plaintiffs' first amended complaint, without leave to amend. Further, the trial court denied leave to file a proposed second amended complaint, and to add a new claim for wrongful foreclosure.
On appeal, the plaintiffs only addressed the district court's: (1) dismissal of their claim for conspiracy to commit fraud through the MERS system; (2) failure to address their oral request for leave to add a wrongful foreclosure claim; (3) dismissal of the foreclosure trustee from the suit; (4) denial of leave to amend their pleadings regarding equitable tolling of their TILA and ACFA claims; and (5) dismissal of their claim for IIED.
On appeal, the Ninth Circuit noted that the main premise of the plaintiffs' lawsuit was that the MERS system impermissibly "splits" the note and deed of trust by facilitating the transfer of the beneficial interest in the loan among lenders while maintaining MERS as the nominal holder of the deed. The Ninth Circuit rejected this theory.
The plaintiffs' lawsuit was also premised on the fact that MERS does not have a financial interest in the loans, which, according to the plaintiffs, renders MERS's status as a beneficiary a sham. The Ninth Circuit rejected this theory, also.
With respect to the conspiracy to commit fraud claim, the plaintiffs alleged that MERS members conspired to commit fraud by using MERS as a sham beneficiary, supposedly promoting and facilitating predatory lending practices through the use of MERS, and supposedly making it impossible for borrowers or regulators to track the changes in lenders.
In upholding the lower court's ruling that the plaintiffs failed to state a cause of action, the Ninth Circuit held "[t]he plaintiffs' allegations fail to address several of [the] necessary elements for a fraud claim."
Specifically, the plaintiffs failed to identify any false representations made to them about the MERS system, and failed to allege they relied on misrepresentations about MERS in deciding to enter into their home loans.
Moreover, the Ninth Circuit found the plaintiffs' allegations were undercut by the language in the standard deed of trust, which provided that MERS was acting "solely as a nominee for Lender and Lender's successors and assigns" and holds "only legal title to the interest granted by Borrower in this Security Instrument." The Court held that "[b]y signing the deeds of trust, the plaintiffs agreed to the terms and were on notice of the contents." The Court further held that "[i]n light of the explicit terms of the standard deed. . ., it does not appear that the plaintiffs were misinformed about MERS's role in their home loans."
With respect to the wrongful foreclosure claim, the Ninth Circuit held that "[t]he plaintiffs' oral request to add a wrongful foreclosure claim was procedurally improper and substantively unsupported." The plaintiffs based their wrongful foreclosure claim on the novel theory that "all transfers of the interests in the home loans within the MERS system are invalid because the designation of MERS as a beneficiary is a sham and the system splits the deed from the note, and, thus, no party is in a position to foreclose."
The Court rejected this argument, holding "[e]ven if MERS were a sham beneficiary, the lenders would still be entitled to repayment of the loans and would be the proper parties to initiate foreclosure after the plaintiffs defaulted on their loans." The Court further held that "the notes and deeds are not irreparably split: the split only renders the mortgage unenforceable if MERS or the trustee, as nominal holders of the deeds, are not agents of the lenders."
With respect to the allegations against the foreclosure trustee, the Court noted the only allegations the plaintiffs directed against the foreclosure trustee was that the trustee supposedly "failed to recognize that its appointment was invalid." The Ninth Circuit held the plaintiffs failed to state a cause of action, because the trustee had an "'absolute right' under Arizona law 'to rely upon any written direction or information furnished to him by the beneficiary.'"
The plaintiffs also asserted that the district court failed to address the equitable tolling of their purported claims under TILA and the ACFA. The plaintiffs alleged their TILA claim should have been tolled because they only speak Spanish, but received their loan documents in English. The Court disagreed, finding "the plaintiffs have not alleged circumstances beyond their control that prevented them from seeking a translation of the loan documents that they signed and received."
Further, the Court also held that the plaintiffs failed to state a claim for equitable estoppel because they "failed to specify what true facts are at issue, or to establish that the alleged misrepresentation and concealment of facts is 'above and beyond the wrongdoing' that forms the basis for their TILA and [ACFA] claims."
Finally, with respect to the IIED allegations, the Ninth Circuit held the plaintiffs failed to state a cause of action because they "essentially allege that the lenders offered them loans that the lenders knew they could not repay," which was not "extreme and outrageous" as is required to state a claim for IIED.
Thursday, August 18, 2011
Cal App Rules in Favor Of MERS in Wrongful Foreclosure Action, Rejects Allegations as to Improper Assignment of DOT
The California Court of Appeal, First District, recently held that: (1) in an action for wrongful foreclosure, the trial court had properly taken judicial notice of MERS's status as the lender's nominee; (2) the borrower's amended complaint did not state a cause of action arising from MERS's alleged improper assignment of the deed of trust; and (3) the borrower failed to state a claim for breach of an alleged foreclosure forbearance agreement, because the borrower did not attach to her complaint a copy of the document that purported to amend the agreement.
A copy of the opinion can be found at:
http://www.courtinfo.ca.gov/opinions/documents/A130478.PDF
This case arose from a mortgage loan under which Mortgage Electronic Registration System, Inc. ("MERS") was identified in the deed of trust as the nominee of the lender. The borrower defaulted on her loan and, at some point thereafter, MERS assigned "all beneficial interest" under the deed of trust, including the note, to HSBC Bank USA, N.A. ("HSBC"), as trustee. Wells Fargo Bank, N.A. ("Wells Fargo"), as the servicer of the loan and, acting on behalf of HSBC, subsequently recorded a substitution of trustee naming another defendant as the trustee, and allegedly foreclosed on the property and sold it.
The borrower filed suit seeking damages and an order voiding the foreclosure suit and her debt. The focus on appeal was the fourth amended complaint against Defendants-Respondents, Wells Fargo and MERS. The borrower alleged that the foreclosure was supposedly unlawful because: (1) MERS supposedly lacked the authority to assign the deed of trust and note to HSBC; and (2) Wells Fargo had purportedly breached an agreement with the borrower not to foreclose.
The borrower alleged she had a forbearance agreement under which Wells Fargo would suspend foreclosure proceedings if the borrower made a certain number of specified monthly payments. The forbearance agreement also provided that failure to make the required payments permitted Wells Fargo to terminate the agreement and to proceed with foreclosure. Soon after entering the alleged agreement, however, the borrower received a letter (the "March letter") from Wells Fargo stating that the "monthly mortgage
payments were being reduced . . . for the next six months." In accordance with the March letter, the borrower submitted a reduced payment amount. Wells Fargo then allegedly refused to accept the payment as
satisfaction of the borrower's obligations and proceeded to foreclose.
The trial court ordered the borrower to attach a copy of the purported "Special Forbearance Agreement" to her fourth amended complaint. The trial court then sustained Wells Fargo's demurrer without leave to amend partly because the fourth amended complaint failed to show reliance on the forbearance agreement, as the borrower attached only the original forbearance agreement to her complaint, but not a copy of the March letter that purported to amend the agreement.
With respect to MERS, the borrower alleged among other things that MERS was not the "true" beneficiary under the deed of trust, never had ownership of the promissory note, and never held an assignable interest in the note or deed of trust. In its demurrer, MERS argued that the borrower's allegations were contradicted by copies of the recorded documents MERS submitted to the court, including the assignment of the deed of trust. The trial court took judicial notice of these documents and sustained the MERS demurrer without leave to amend. The trial court noted that the borrower's claims did not state a cause of action against MERS because the "only apparent grounds for suing MERS are the allegations that the deed of trust improperly named MERS as nominee and beneficiary, and that there was no physical delivery of the note to HSBC."
The Court of Appeal agreed with the trial court in all respects.
First, the appellate court rejected the borrower's argument that it was error to take judicial notice of the recorded real property documents attached to MERS's demurrer and noted that where the authenticity of the documents is not being challenged, it is permissible to take judicial notice of the legal effect of the documents. The Court of Appeal cited a number of court decisions that "establish that a court may take judicial notice of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the documents' authenticity." The Court also noted that, contrary to the borrower's assertion, "MERS's status as beneficiary was not the type of fact that is generally an improper subject of judicial notice . . . since its status was not a matter of fact existing apart from the document itself." Instead, the Court noted, "MERS was the beneficiary under the deed of trust because, as a legally operative document, the deed of trust designated MERS as the beneficiary." The Court also observed that court decisions have generally found that the use of MERS as beneficiary does not invalidate otherwise proper foreclosure sales.
Also rejecting the borrower's argument that MERS had the burden of proving that a valid assignment had occurred, the Court noted that the nonjudicial foreclosure process is afforded a "presumption of regularity." Moreover, the Court stated that, contrary to the borrower's assertions, "the lack of a possessory interest in the note did not necessarily prevent MERS from having the authority to assign the note." The Court noted that as the lender's nominee, MERS had the authority to act as the lender's agent and that the complaint failed to show that MERS, as the nominee, lacked the authority to make the assignment of the note on behalf of the lender.
The Court also pointed out that in order to state a claim that the foreclosure sale was invalid because HSBC lacked the authority to foreclose, the borrower was required to allege not only that the MERS assignment was invalid, but also that HSBC did not receive an assignment of the debt in any manner whatsoever, which the borrower failed to do.
The Court observed that, unlike assignments of security interests, assignments of debt are commonly not recorded, and the original "lender could readily have assigned the promissory note to HSBC in an unrecorded document that was not disclosed to the [borrower]." The borrower had also failed to demonstrate how she had been prejudiced by the MERS assignment, especially in light of the general expectation that the promissory note would be assigned and that her obligations under the note to pay remained unchanged. The court also rejected the borrower's contention that the deed of trust was ambiguous.
As to the claim against Wells Fargo for the alleged violation of the forbearance agreement, like the trial court, the Court of Appeal noted that the borrower had failed to attach a copy of the March letter to her complaint even though the trial court granted her leave to amend on condition that she attach a copy of the forbearance agreement to her complaint. Noting that ordinarily the borrower would not be required to attach a copy of the March letter to the complaint, the Court pointed out that in light of the trial court's previous ruling on the earlier demurrer, the borrower was required to attach a copy of the original forbearance agreement as well as the March letter, which purported to amend the forbearance agreement on which she based her claim.
Finally, the Court also concluded that the borrower's complaint did not state a claim for promissory estoppel, because the borrower had given proper consideration in exchange for Wells Fargo's promise in the forbearance agreement not to foreclose.
A copy of the opinion can be found at:
http://www.courtinfo.ca.gov/opinions/documents/A130478.PDF
This case arose from a mortgage loan under which Mortgage Electronic Registration System, Inc. ("MERS") was identified in the deed of trust as the nominee of the lender. The borrower defaulted on her loan and, at some point thereafter, MERS assigned "all beneficial interest" under the deed of trust, including the note, to HSBC Bank USA, N.A. ("HSBC"), as trustee. Wells Fargo Bank, N.A. ("Wells Fargo"), as the servicer of the loan and, acting on behalf of HSBC, subsequently recorded a substitution of trustee naming another defendant as the trustee, and allegedly foreclosed on the property and sold it.
The borrower filed suit seeking damages and an order voiding the foreclosure suit and her debt. The focus on appeal was the fourth amended complaint against Defendants-Respondents, Wells Fargo and MERS. The borrower alleged that the foreclosure was supposedly unlawful because: (1) MERS supposedly lacked the authority to assign the deed of trust and note to HSBC; and (2) Wells Fargo had purportedly breached an agreement with the borrower not to foreclose.
The borrower alleged she had a forbearance agreement under which Wells Fargo would suspend foreclosure proceedings if the borrower made a certain number of specified monthly payments. The forbearance agreement also provided that failure to make the required payments permitted Wells Fargo to terminate the agreement and to proceed with foreclosure. Soon after entering the alleged agreement, however, the borrower received a letter (the "March letter") from Wells Fargo stating that the "monthly mortgage
payments were being reduced . . . for the next six months." In accordance with the March letter, the borrower submitted a reduced payment amount. Wells Fargo then allegedly refused to accept the payment as
satisfaction of the borrower's obligations and proceeded to foreclose.
The trial court ordered the borrower to attach a copy of the purported "Special Forbearance Agreement" to her fourth amended complaint. The trial court then sustained Wells Fargo's demurrer without leave to amend partly because the fourth amended complaint failed to show reliance on the forbearance agreement, as the borrower attached only the original forbearance agreement to her complaint, but not a copy of the March letter that purported to amend the agreement.
With respect to MERS, the borrower alleged among other things that MERS was not the "true" beneficiary under the deed of trust, never had ownership of the promissory note, and never held an assignable interest in the note or deed of trust. In its demurrer, MERS argued that the borrower's allegations were contradicted by copies of the recorded documents MERS submitted to the court, including the assignment of the deed of trust. The trial court took judicial notice of these documents and sustained the MERS demurrer without leave to amend. The trial court noted that the borrower's claims did not state a cause of action against MERS because the "only apparent grounds for suing MERS are the allegations that the deed of trust improperly named MERS as nominee and beneficiary, and that there was no physical delivery of the note to HSBC."
The Court of Appeal agreed with the trial court in all respects.
First, the appellate court rejected the borrower's argument that it was error to take judicial notice of the recorded real property documents attached to MERS's demurrer and noted that where the authenticity of the documents is not being challenged, it is permissible to take judicial notice of the legal effect of the documents. The Court of Appeal cited a number of court decisions that "establish that a court may take judicial notice of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the documents' authenticity." The Court also noted that, contrary to the borrower's assertion, "MERS's status as beneficiary was not the type of fact that is generally an improper subject of judicial notice . . . since its status was not a matter of fact existing apart from the document itself." Instead, the Court noted, "MERS was the beneficiary under the deed of trust because, as a legally operative document, the deed of trust designated MERS as the beneficiary." The Court also observed that court decisions have generally found that the use of MERS as beneficiary does not invalidate otherwise proper foreclosure sales.
Also rejecting the borrower's argument that MERS had the burden of proving that a valid assignment had occurred, the Court noted that the nonjudicial foreclosure process is afforded a "presumption of regularity." Moreover, the Court stated that, contrary to the borrower's assertions, "the lack of a possessory interest in the note did not necessarily prevent MERS from having the authority to assign the note." The Court noted that as the lender's nominee, MERS had the authority to act as the lender's agent and that the complaint failed to show that MERS, as the nominee, lacked the authority to make the assignment of the note on behalf of the lender.
The Court also pointed out that in order to state a claim that the foreclosure sale was invalid because HSBC lacked the authority to foreclose, the borrower was required to allege not only that the MERS assignment was invalid, but also that HSBC did not receive an assignment of the debt in any manner whatsoever, which the borrower failed to do.
The Court observed that, unlike assignments of security interests, assignments of debt are commonly not recorded, and the original "lender could readily have assigned the promissory note to HSBC in an unrecorded document that was not disclosed to the [borrower]." The borrower had also failed to demonstrate how she had been prejudiced by the MERS assignment, especially in light of the general expectation that the promissory note would be assigned and that her obligations under the note to pay remained unchanged. The court also rejected the borrower's contention that the deed of trust was ambiguous.
As to the claim against Wells Fargo for the alleged violation of the forbearance agreement, like the trial court, the Court of Appeal noted that the borrower had failed to attach a copy of the March letter to her complaint even though the trial court granted her leave to amend on condition that she attach a copy of the forbearance agreement to her complaint. Noting that ordinarily the borrower would not be required to attach a copy of the March letter to the complaint, the Court pointed out that in light of the trial court's previous ruling on the earlier demurrer, the borrower was required to attach a copy of the original forbearance agreement as well as the March letter, which purported to amend the forbearance agreement on which she based her claim.
Finally, the Court also concluded that the borrower's complaint did not state a claim for promissory estoppel, because the borrower had given proper consideration in exchange for Wells Fargo's promise in the forbearance agreement not to foreclose.
Thursday, July 28, 2011
MERS
Mortgage Electronic Registration Systems, Inc. (MERS) is withdrawing from the foreclosure business. MERS has issued a notice to its members stating that no foreclosure proceeding may be initiated and no legal proceedings in a bankruptcy may be filed in the name of MERS. Amid an onslaught of court filings and foreclosure-related investigations, MERS proposed a rule change in March banning its members from using MERS as the foreclosing agent. The policy change has officially been adopted. http://www.dsnews.com/articles/mers-bows-out-of-foreclosure-and-bankruptcy-proceedings-2011-07-27
The policy change was officially adopted last week and carries an effective date of July 22, 2011
Note
Fannie Mae, Freddie Mac, several large servicers, and a number of foreclosure attorneys representing lenders have stopped foreclosing in the name of MERS already
Friday, July 1, 2011
Bank of NY v Silverberg -NY APP Ct
An intermediate appellate court of the State of New York recently held that Mortgage Electronic Registration Systems, Inc. ("MERS") cannot assign the right to foreclose to a plaintiff in a foreclosure action, absent MERS's right to enforce, or possession of, the related promissory note.
The foreclosure defendant borrowers ("borrowers") received two loans from Countrywide Home Loans ("Countrywide"), each secured by separate mortgages. Both mortgages identified MERS as the mortgagee of record, as nominee of Countrywide.
The borrowers then executed a consolidation agreement with Countrywide (the "consolidation agreement"). The terms of the consolidation agreement again named MERS as mortgagee as nominee of Countrywide, and named Countrywide as the lender and note holder. In addition, the terms of the agreement gave MERS the right to assign the underlying mortgages, but did not specifically give MERS the right to assign the underlying notes.
The borrowers defaulted. After the default, MERS assigned the consolidation agreement to Bank of New York, as Trustee ("Trustee").
Trustee initiated foreclosure proceedings in its name. The borrowers moved to dismiss the foreclosure action for lack of standing. The lower court denied borrowers' motion, and borrowers appealed.
The appellate court noted that, under New York law, "[i]n a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced;" and that "a transfer of the mortgage without the debt is a nullity." Based on that precedent, the Court concluded that "a foreclosure of a mortgage cannot be pursued by one who has demonstrated no right to the debt."
With this in mind, the Court scrutinized the consolidation agreement. It found that although the agreement gave MERS the right to assign the mortgages, it did not specifically give MERS the right to assign the underlying notes. Further, the record did not indicate that the notes were ever physically delivered to MERS. Therefore, MERS did not have the authority to assign the notes. According to the Court, because Countrywide "merely stepped into the shoes of MERS" as the assignee of the mortgages, the Court held that Countrywide and its successors and assigns did not have standing to foreclose.
The Court did not explain how the plaintiff Trustee was somehow not both the holder or assignee of the subject mortgage, and the holder or assignee of the underlying notes, at the time the foreclosure action was commenced.
The foreclosure plaintiff Trustee relied a recent New York appellate court opinion which held that MERS did have the authority to foreclose where MERS is identified in the mortgage as the mortgagee and nominee of record (as was the case in the consolidation agreement). However, the appellate court here noted that the other case involved a lender who transferred the promissory note to MERS prior to the commencement of the foreclosure action. Here, in contrast, there was no such transfer. Thus, the Court found it distinguishable from the matter at hand.
The Court concluded by noting that it was "mindful" of the impact its decision might have on the mortgage industry. However, the Court stated that "the law must not yield to expediency and the convenience of lending institutions."
The foreclosure defendant borrowers ("borrowers") received two loans from Countrywide Home Loans ("Countrywide"), each secured by separate mortgages. Both mortgages identified MERS as the mortgagee of record, as nominee of Countrywide.
The borrowers then executed a consolidation agreement with Countrywide (the "consolidation agreement"). The terms of the consolidation agreement again named MERS as mortgagee as nominee of Countrywide, and named Countrywide as the lender and note holder. In addition, the terms of the agreement gave MERS the right to assign the underlying mortgages, but did not specifically give MERS the right to assign the underlying notes.
The borrowers defaulted. After the default, MERS assigned the consolidation agreement to Bank of New York, as Trustee ("Trustee").
Trustee initiated foreclosure proceedings in its name. The borrowers moved to dismiss the foreclosure action for lack of standing. The lower court denied borrowers' motion, and borrowers appealed.
The appellate court noted that, under New York law, "[i]n a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced;" and that "a transfer of the mortgage without the debt is a nullity." Based on that precedent, the Court concluded that "a foreclosure of a mortgage cannot be pursued by one who has demonstrated no right to the debt."
With this in mind, the Court scrutinized the consolidation agreement. It found that although the agreement gave MERS the right to assign the mortgages, it did not specifically give MERS the right to assign the underlying notes. Further, the record did not indicate that the notes were ever physically delivered to MERS. Therefore, MERS did not have the authority to assign the notes. According to the Court, because Countrywide "merely stepped into the shoes of MERS" as the assignee of the mortgages, the Court held that Countrywide and its successors and assigns did not have standing to foreclose.
The Court did not explain how the plaintiff Trustee was somehow not both the holder or assignee of the subject mortgage, and the holder or assignee of the underlying notes, at the time the foreclosure action was commenced.
The foreclosure plaintiff Trustee relied a recent New York appellate court opinion which held that MERS did have the authority to foreclose where MERS is identified in the mortgage as the mortgagee and nominee of record (as was the case in the consolidation agreement). However, the appellate court here noted that the other case involved a lender who transferred the promissory note to MERS prior to the commencement of the foreclosure action. Here, in contrast, there was no such transfer. Thus, the Court found it distinguishable from the matter at hand.
The Court concluded by noting that it was "mindful" of the impact its decision might have on the mortgage industry. However, the Court stated that "the law must not yield to expediency and the convenience of lending institutions."
Tuesday, May 17, 2011
Monday, April 25, 2011
Residential Funding v Saurman
A Michigan Court of Appeals recently held that Mortgage Electronic Registration Systems (“MERS”), the mortgagee under the security instrument for a home mortgage loan, but not the holder of the note evidencing the debt for that loan, could not exercise its contractual right to foreclose by advertisement pursuant to the applicable Michigan law, MCL 600.3204(d)(1).
Defendant-borrower (“Borrower”) obtained a home mortgage loan which included a security instrument that provided for rights of foreclosure by the designated mortgagee, MERS. However, MERS was not the owner of the debt and did not hold or service the subject loan. After the Borrower defaulted on his loan, MERS began non-judicial foreclosure by advertisement, purchased the property and then quit-claimed the property to successor lender (“Plaintiff”). When Plaintiff began an eviction action, Borrower challenged the foreclosure, arguing that MERS did not have authority to foreclose by advertisement because it did not qualify as a mortgagee permitted to do so under MCL 600.3204(d)(1). The lower court rejected Borrower’s arguments and Borrower appealed.
As you may recall, Michigan law allows a party to foreclose a mortgage by advertisement if, among other things, that party owns an interest in the indebtedness secured by the mortgage. See MCL 600.3204(d)(1). The Court first held that where, as here, the “indebtedness is solely based upon the note,” a party “must have a legal share, title, or right in the note” in order for that “party to own an interest in the indebtedness” under MCL 600.3204(d)(1). Further, an “interest in the mortgage” is insufficient because “the note and the mortgage are two different legal transactions providing two different sets of rights, even though they are typically employed together.”
The Court next held that “MERS did not have the authority to foreclose by advertisement on Borrower’s property.” The Court reasoned that “it was the Plaintiff that lent the Borrower money pursuant to the terms of the note,” and not MERS as mortgagee, which “only held an interest in the property as security for the note, not an interest in the note itself.” “Moreover, the mortgage specifically clarified that, although MERS was the mortgagee, MERS held ‘only legal title to the interest granted’ by Borrower in the mortgage.” “Consequently, the interest in the mortgage represented, at most, an interest in Borrower’s property. MERS was not referred to in any way in the note and only Plaintiff held the note.”
The Court also rejected various arguments set forth by the plaintiff mortgage loan investor. First, the Court denied that “MERS was a contractual owner of an interest in the note based on the agreement between MERS and the lenders” because “MERS had no right to possess the debt, or the money paid on it.” In addition, “the fact that the originating lender gave MERS authority to take ‘any action required of the Lender’ did not transform MERS into an owner of an interest in the note.” The “contract language expressly limits the interests MERS owns to those granted in the mortgage instrument and limits MERS’ right to take action to those actions related to the mortgage instrument.”
The Court also rejected the plaintiff mortgage loan investor’s argument “that MERS had the authority to foreclose by advertisement as the agent or nominee for the originating lender, who held the note and an equitable interest in the mortgage.” The Court reasoned that the “statute explicitly requires that, in order to foreclose by advertisement, the foreclosing party must possess an interest in the indebtedness,” and “simply does not permit foreclosure in the name of an agent or a nominee.”
The plaintiff mortgage loan investor also argued that the Michigan legislature did not create three distinct categories of entity which could foreclose by advertisement, but rather envisioned a continuum of entities: those that actually own the loan, those that service the loan, and some ill-defined category which might be called “everything in between.” However, the Court found no language in the statute providing for a “continuum,” no analysis from the plaintiff mortgage loan investor of what the “continuum” constitutes, and therefore found no merit in that position.
Defendant-borrower (“Borrower”) obtained a home mortgage loan which included a security instrument that provided for rights of foreclosure by the designated mortgagee, MERS. However, MERS was not the owner of the debt and did not hold or service the subject loan. After the Borrower defaulted on his loan, MERS began non-judicial foreclosure by advertisement, purchased the property and then quit-claimed the property to successor lender (“Plaintiff”). When Plaintiff began an eviction action, Borrower challenged the foreclosure, arguing that MERS did not have authority to foreclose by advertisement because it did not qualify as a mortgagee permitted to do so under MCL 600.3204(d)(1). The lower court rejected Borrower’s arguments and Borrower appealed.
As you may recall, Michigan law allows a party to foreclose a mortgage by advertisement if, among other things, that party owns an interest in the indebtedness secured by the mortgage. See MCL 600.3204(d)(1). The Court first held that where, as here, the “indebtedness is solely based upon the note,” a party “must have a legal share, title, or right in the note” in order for that “party to own an interest in the indebtedness” under MCL 600.3204(d)(1). Further, an “interest in the mortgage” is insufficient because “the note and the mortgage are two different legal transactions providing two different sets of rights, even though they are typically employed together.”
The Court next held that “MERS did not have the authority to foreclose by advertisement on Borrower’s property.” The Court reasoned that “it was the Plaintiff that lent the Borrower money pursuant to the terms of the note,” and not MERS as mortgagee, which “only held an interest in the property as security for the note, not an interest in the note itself.” “Moreover, the mortgage specifically clarified that, although MERS was the mortgagee, MERS held ‘only legal title to the interest granted’ by Borrower in the mortgage.” “Consequently, the interest in the mortgage represented, at most, an interest in Borrower’s property. MERS was not referred to in any way in the note and only Plaintiff held the note.”
The Court also rejected various arguments set forth by the plaintiff mortgage loan investor. First, the Court denied that “MERS was a contractual owner of an interest in the note based on the agreement between MERS and the lenders” because “MERS had no right to possess the debt, or the money paid on it.” In addition, “the fact that the originating lender gave MERS authority to take ‘any action required of the Lender’ did not transform MERS into an owner of an interest in the note.” The “contract language expressly limits the interests MERS owns to those granted in the mortgage instrument and limits MERS’ right to take action to those actions related to the mortgage instrument.”
The Court also rejected the plaintiff mortgage loan investor’s argument “that MERS had the authority to foreclose by advertisement as the agent or nominee for the originating lender, who held the note and an equitable interest in the mortgage.” The Court reasoned that the “statute explicitly requires that, in order to foreclose by advertisement, the foreclosing party must possess an interest in the indebtedness,” and “simply does not permit foreclosure in the name of an agent or a nominee.”
The plaintiff mortgage loan investor also argued that the Michigan legislature did not create three distinct categories of entity which could foreclose by advertisement, but rather envisioned a continuum of entities: those that actually own the loan, those that service the loan, and some ill-defined category which might be called “everything in between.” However, the Court found no language in the statute providing for a “continuum,” no analysis from the plaintiff mortgage loan investor of what the “continuum” constitutes, and therefore found no merit in that position.
Monday, April 11, 2011
Tuesday, March 1, 2011
In the News
Termination of Foreclosure Mitigation Programs
House Financial Services - Subcommittee on Insurance, Housing and Community Opportunity
Subcommittee Hearing
Insurance, Housing and Community Opportunity Subcommittee (Chairwoman Biggert, R-Ill.) of House Financial Services Committee will hold a hearing titled "Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs."
Contact: 202-225-7502
Note: The full committee will mark up these bills March 3.
Date: Wednesday, March 2, 2 p.m.
Place: 2220 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Termination of Foreclosure Mitigation Programs
House Financial Services Committee
Full Committee Markup
House Financial Services Committee (Chairman Bachus, R-Ala.) will mark up pending legislation.
Contact: Larry Lavender - Majority Chief of Staff at 202-225-7502
Note: The Insurance and Housing Subcommittee will hold a hearing on the bills March 2.
Date: Thursday, March 3, 10 a.m.
Place: 2128 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Senate Judiciary Committee
Full Committee Markup
Senate Judiciary Committee (Chairman Leahy, D-Vt.) will mark up pending legislation and vote on pending nominations.
Contact: Bruce Cohen - Democratic Chief Counsel at 202-224-7703
Date: Thursday, March 3, 10 a.m.
Place: 226 Dirksen Bldg.
Note: S 193, S 49 and D'Agostino and Feighery nominations carried over from Feb. 17.
Agenda:
S 193 - USA PATRIOT Act Sunset Extension Act of 2011
S 49 - Railroad Antitrust Enforcement Act of 2011
S 222 - Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Caitlin Joan Halligan to be U.S. Circuit Judge for the District of Columbia Circuit
Jimmie V. Reyna to be U.S. Circuit Judge for the Federal Circuit
Mae D'Agostino to be U.S. District Judge for the Northern District of New York
John A. Kronstadt to be U.S. District Judge for the Central District of California
Vincent L. Briccetti to be U.S. District Judge for the Southern District of New York
Arenda L. Wright Allen to be U.S. District Judge for the Eastern District of Virginia
Michael Francis Urbanski to be U.S. District Judge for the Western District of Virginia
Timothy J. Feighery to be chairman, Foreign Claims Settlement Commission
Foreclosure Issues; Neighborhood Stabilization; Debit Card Fees
Federal Reserve System
Advisory Committee Meeting
Consumer Advisory Council of the Federal Reserve Board will meet to discuss foreclosure issues (focusing on loss-mitigation efforts, including the administration's Home Affordable Modification Program, servicing issues related to foreclosures, and the development of national mortgage servicing standards); neighborhood stabilization and REO issues (including issues related to the disposition of real estate owned (REO) properties, the impact of foreclosed and vacant properties on communities and neighborhood stabilization strategies); proposed rules regarding debit card interchange fees and routing .
Contact: Jennifer Kerslake at 202-452-6470
For further information: http://www.gpo.gov/fdsys/pkg/FR-2011-02-22/html/2011-3843.htm
Date: Thursday, March 10, 9 a.m.
Place: Martin Building is located on C Street, NW., between 20th and 21st Streets
House Financial Services - Subcommittee on Insurance, Housing and Community Opportunity
Subcommittee Hearing
Insurance, Housing and Community Opportunity Subcommittee (Chairwoman Biggert, R-Ill.) of House Financial Services Committee will hold a hearing titled "Legislative Proposals to End Taxpayer Funding for Ineffective Foreclosure Mitigation Programs."
Contact: 202-225-7502
Note: The full committee will mark up these bills March 3.
Date: Wednesday, March 2, 2 p.m.
Place: 2220 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Termination of Foreclosure Mitigation Programs
House Financial Services Committee
Full Committee Markup
House Financial Services Committee (Chairman Bachus, R-Ala.) will mark up pending legislation.
Contact: Larry Lavender - Majority Chief of Staff at 202-225-7502
Note: The Insurance and Housing Subcommittee will hold a hearing on the bills March 2.
Date: Thursday, March 3, 10 a.m.
Place: 2128 Rayburn Bldg.
Agenda:
Draft Bill - The Home Affordable Modification Program (HAMP) Termination Act
Draft Bill - The Neighborhood Stabilization Program Termination Act
Draft Bill - The FHA Refinance Program Termination Act
Draft Bill - The Emergency Mortgage Relief Program Termination Act
Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Senate Judiciary Committee
Full Committee Markup
Senate Judiciary Committee (Chairman Leahy, D-Vt.) will mark up pending legislation and vote on pending nominations.
Contact: Bruce Cohen - Democratic Chief Counsel at 202-224-7703
Date: Thursday, March 3, 10 a.m.
Place: 226 Dirksen Bldg.
Note: S 193, S 49 and D'Agostino and Feighery nominations carried over from Feb. 17.
Agenda:
S 193 - USA PATRIOT Act Sunset Extension Act of 2011
S 49 - Railroad Antitrust Enforcement Act of 2011
S 222 - Limiting Investor and Homeowner Loss in Foreclosure Act of 2010
Caitlin Joan Halligan to be U.S. Circuit Judge for the District of Columbia Circuit
Jimmie V. Reyna to be U.S. Circuit Judge for the Federal Circuit
Mae D'Agostino to be U.S. District Judge for the Northern District of New York
John A. Kronstadt to be U.S. District Judge for the Central District of California
Vincent L. Briccetti to be U.S. District Judge for the Southern District of New York
Arenda L. Wright Allen to be U.S. District Judge for the Eastern District of Virginia
Michael Francis Urbanski to be U.S. District Judge for the Western District of Virginia
Timothy J. Feighery to be chairman, Foreign Claims Settlement Commission
Foreclosure Issues; Neighborhood Stabilization; Debit Card Fees
Federal Reserve System
Advisory Committee Meeting
Consumer Advisory Council of the Federal Reserve Board will meet to discuss foreclosure issues (focusing on loss-mitigation efforts, including the administration's Home Affordable Modification Program, servicing issues related to foreclosures, and the development of national mortgage servicing standards); neighborhood stabilization and REO issues (including issues related to the disposition of real estate owned (REO) properties, the impact of foreclosed and vacant properties on communities and neighborhood stabilization strategies); proposed rules regarding debit card interchange fees and routing .
Contact: Jennifer Kerslake at 202-452-6470
For further information: http://www.gpo.gov/fdsys/pkg/FR-2011-02-22/html/2011-3843.htm
Date: Thursday, March 10, 9 a.m.
Place: Martin Building is located on C Street, NW., between 20th and 21st Streets
Friday, February 25, 2011
Cal App Ct Upholds Dismissal of MERS Challenge
A borrower obtained a loan in the amount of $331,000 from a lender to finance the purchase of real estate. In connection with that transaction, he executed a promissory note (the “Note”), which was secured by a deed of trust. The deed of trust identified the lender, as well as naming Mortgage Electronic Registration Systems, Inc. (“MERS”) as beneficiary.
After the borrower defaulted on his loan payments, he was mailed a notice of default and election to sell, which initiated a non-judicial foreclosure process. The notice of default was sent to borrower by ReconTrust, which identified itself as an agent for MERS. Accompanying the notice of default was a declaration signed by an employee of Countrywide, which was acting as the loan servicer.
The borrower then filed a lawsuit against Countrywide, MERS and ReconTrust, attempting to allege a number of different causes of action. The only causes of action at issue on the appeal were the first and second causes of action.
The borrower’s first cause of action was titled “Wrongful Initiation of Foreclosure” and alleged that “the person or entity who directed the initiation of the foreclosure process, whether through an agent of MERS or otherwise, was neither the Note's rightful owner nor acting with the rightful owner's authority.” In other words, the first cause of action asserted that MERS did not have authority to initiate the foreclosure because it was not authorized to do so by the current owner of the Note.
The borrower’s second cause of action sought declaratory relief on the issue of whether California “[Civil Code section 2924, subdivision (a)] allows a borrower, before his or her property is sold, to bring a civil action in order to test whether the person electing to sell the property is, or is duly authorized to so by, the owner of a beneficial interest in it.” The court noted that although designated a cause of action for declaratory relief, the second cause of action served simply as a legal argument in support of the first cause of action. The defendants filed a demurrer as to the first and second causes of action, which the trial court sustained without leave to amend.
In sustaining the ruling of the trial court, the appellate court first noted that California’s non-judicial foreclosure scheme is set forth in California Civil Code sections 2924 through 2924k, which “provide a comprehensive framework for the regulation of a non-judicial foreclosure sale pursuant to a power of sale contained in a deed of trust.” The court noted that “[t]he purposes of [the] comprehensive scheme are threefold: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” Finally, the court stated that
“[b]ecause of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute.”
With the purpose of California’s comprehensive non-judicial foreclosure scheme in mind, the court ruled that the borrower was “attempting to interject the courts into” the scheme without pointing to any legal authority to do so. The borrower argued that such authority was provided by Civil Code section 2924, subdivision (a). The court rejected the argument noting that Section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the foreclosure process. The court further ruled that “nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action.”
The court then discussed three federal district court cases, which the borrower cited as purported legal authority for the alleged right to challenge an entity’s ability to initiate the foreclosure process. The court found that the cases were not controlling, nor were they on point, as none recognized “a cause of action requiring the noteholder's nominee to prove its authority to initiate a foreclosure proceeding.” Further, the court noted that “the district court cases from outside of California are inapposite because they do not apply California non-judicial foreclosure law.”
Finally, the borrower argued that even if California's non-judicial foreclosure law did not provide for the filing of a lawsuit to determine whether MERS had been authorized by the holder of the Note to initiate a foreclosure, the court should nevertheless interpret such a right as the “[l]egislature may not have contemplated or had time to fully respond to the present situation.” Again, the court rejected this argument, finding that “because California's non-judicial foreclosure statute is unambiguously silent on any right to bring the type of action identified by [the borrower], there is no basis for the courts to create such a right.” The court therefore held that “the trial court properly sustained Defendants’ demurrer to the first and second causes of action in [the borrower’s] complaint.”
In addition, the appellate court went on to hold that “[a]s an independent ground for affirming the order sustaining the demurrer. . . even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust. . . establishes as a factual matter that [borrower’s] claims lack merit.” The court noted that the language of the deed expressly stated MERS had the authority to initiate a foreclosure.
Finally, the court held that the borrower would not be able to cure the defects of his complaint simply by amending the allegations. The court therefore held that “the trial court properly sustained the demurrer without leave to amend.”
After the borrower defaulted on his loan payments, he was mailed a notice of default and election to sell, which initiated a non-judicial foreclosure process. The notice of default was sent to borrower by ReconTrust, which identified itself as an agent for MERS. Accompanying the notice of default was a declaration signed by an employee of Countrywide, which was acting as the loan servicer.
The borrower then filed a lawsuit against Countrywide, MERS and ReconTrust, attempting to allege a number of different causes of action. The only causes of action at issue on the appeal were the first and second causes of action.
The borrower’s first cause of action was titled “Wrongful Initiation of Foreclosure” and alleged that “the person or entity who directed the initiation of the foreclosure process, whether through an agent of MERS or otherwise, was neither the Note's rightful owner nor acting with the rightful owner's authority.” In other words, the first cause of action asserted that MERS did not have authority to initiate the foreclosure because it was not authorized to do so by the current owner of the Note.
The borrower’s second cause of action sought declaratory relief on the issue of whether California “[Civil Code section 2924, subdivision (a)] allows a borrower, before his or her property is sold, to bring a civil action in order to test whether the person electing to sell the property is, or is duly authorized to so by, the owner of a beneficial interest in it.” The court noted that although designated a cause of action for declaratory relief, the second cause of action served simply as a legal argument in support of the first cause of action. The defendants filed a demurrer as to the first and second causes of action, which the trial court sustained without leave to amend.
In sustaining the ruling of the trial court, the appellate court first noted that California’s non-judicial foreclosure scheme is set forth in California Civil Code sections 2924 through 2924k, which “provide a comprehensive framework for the regulation of a non-judicial foreclosure sale pursuant to a power of sale contained in a deed of trust.” The court noted that “[t]he purposes of [the] comprehensive scheme are threefold: (1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” Finally, the court stated that
“[b]ecause of the exhaustive nature of this scheme, California appellate courts have refused to read any additional requirements into the non-judicial foreclosure statute.”
With the purpose of California’s comprehensive non-judicial foreclosure scheme in mind, the court ruled that the borrower was “attempting to interject the courts into” the scheme without pointing to any legal authority to do so. The borrower argued that such authority was provided by Civil Code section 2924, subdivision (a). The court rejected the argument noting that Section 2924, subdivision (a)(1) states that a “trustee, mortgagee, or beneficiary, or any of their authorized agents” may initiate the foreclosure process. The court further ruled that “nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action.”
The court then discussed three federal district court cases, which the borrower cited as purported legal authority for the alleged right to challenge an entity’s ability to initiate the foreclosure process. The court found that the cases were not controlling, nor were they on point, as none recognized “a cause of action requiring the noteholder's nominee to prove its authority to initiate a foreclosure proceeding.” Further, the court noted that “the district court cases from outside of California are inapposite because they do not apply California non-judicial foreclosure law.”
Finally, the borrower argued that even if California's non-judicial foreclosure law did not provide for the filing of a lawsuit to determine whether MERS had been authorized by the holder of the Note to initiate a foreclosure, the court should nevertheless interpret such a right as the “[l]egislature may not have contemplated or had time to fully respond to the present situation.” Again, the court rejected this argument, finding that “because California's non-judicial foreclosure statute is unambiguously silent on any right to bring the type of action identified by [the borrower], there is no basis for the courts to create such a right.” The court therefore held that “the trial court properly sustained Defendants’ demurrer to the first and second causes of action in [the borrower’s] complaint.”
In addition, the appellate court went on to hold that “[a]s an independent ground for affirming the order sustaining the demurrer. . . even if there was a legal basis for an action to determine whether MERS has authority to initiate a foreclosure proceeding, the deed of trust. . . establishes as a factual matter that [borrower’s] claims lack merit.” The court noted that the language of the deed expressly stated MERS had the authority to initiate a foreclosure.
Finally, the court held that the borrower would not be able to cure the defects of his complaint simply by amending the allegations. The court therefore held that “the trial court properly sustained the demurrer without leave to amend.”
Monday, February 21, 2011
MERS
This is a follow-up piece on the decision, from the Wall Street Journal: http://blogs.wsj.com/developments/2011/02/14/us-bankruptcy-judge-questions-legal-claims-of-mers/
The actual holding of the case granted the MFR in favor of the movant, on the grounds that the prior judicial foreclosure ruling the party was trying to enforce was res judicata; the exciting part of the decision comes when the judge holds that not withstanding the ruling, in future cases where a party appears in court with a claim based on an assignment from MERS, they will be out of luck...this is the actual ruling: http://www.nyeb.uscourts.gov/opinions/reg/334499_41_opinion.pdf
http://www.dsnews.com/articles/conflicting-rulings-abound-in-mers-judgments-2011-02-17
The actual holding of the case granted the MFR in favor of the movant, on the grounds that the prior judicial foreclosure ruling the party was trying to enforce was res judicata; the exciting part of the decision comes when the judge holds that not withstanding the ruling, in future cases where a party appears in court with a claim based on an assignment from MERS, they will be out of luck...this is the actual ruling: http://www.nyeb.uscourts.gov/opinions/reg/334499_41_opinion.pdf
http://www.dsnews.com/articles/conflicting-rulings-abound-in-mers-judgments-2011-02-17
Tuesday, December 14, 2010
Friday, November 19, 2010
MERS
MERS itself has only 50 employees and they are not involved in signing mortgage assignments to trusts. These servicing company employees sign as officers of MERS “as nominee for” a particular mortgage company or bank. They are not employees of the mortgage companies or employees of the original named lender, but their titles on the Mortgage Assignment belie this and typically read: “Linda Green, Vice President, Mortgage Electronic Registration Systems, Inc., as nominee for American Brokers Conduit.”
MERS president R.K. Arnold testified in Senate testimony earlier this week that there are over 20,000 MERS “certifying officers.” To become a MERS certifying officer, a mortgage servicing company employee need only complete an online form and pay $25.00. Because of the concealment of the actual employer on the Mortgage Assignments, it is easy enough for Courts, and homeowners, to believe that they are examining a document prepared by the lender that sold the mortgage to the trust, when, in fact, the signer was a servicing company clerk paid by the trust itself.
The representative of the GRANTOR is, in truth, a paid employee of the GRANTEE. In hundreds of thousands of cases, the authority is, therefore, misrepresented. It is now also coming to light that in tens of thousands of cases, the individuals signing these forms did not even sign their own names. The documents were made to look official because other mortgage servicing company employees signed as witnesses and then all four “signatures” were notarized by yet another mortgage servicing company employee. The titles were false, the signatures were forged, the “witnessing” was a lie, as was the notarization. Despite all of these false statements, the BIGGEST LIE on these documents is that the trust acquired the mortgage on the date stated plainly on the Mortgage Assignment. In truth, no such transfers ever took place as represented by these MERS certifying officers (or their stand-in forgers). The date chosen almost always corresponds not to an actual transfer, but to the date roughly corresponding to the time the loan went into default. The Mortgage Assignment was prepared only to provide “proof” that the trust owned the mortgage. Until courts require Trusts to come forward with actual proof that they acquired the mortgages in question, specifying whom they paid and how much they paid for each such trust-owned mortgage, the actual owner of these mortgages will never be known.
http://stopforeclosurefraud.com/2010/11/18/false-statements-r-k-arnold-mortgage-electronic-registration-systems/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ForeclosureFraudByDinsfla+%28FORECLOSURE+FRAUD+%7C+by+DinSFLA%29
MERS president R.K. Arnold testified in Senate testimony earlier this week that there are over 20,000 MERS “certifying officers.” To become a MERS certifying officer, a mortgage servicing company employee need only complete an online form and pay $25.00. Because of the concealment of the actual employer on the Mortgage Assignments, it is easy enough for Courts, and homeowners, to believe that they are examining a document prepared by the lender that sold the mortgage to the trust, when, in fact, the signer was a servicing company clerk paid by the trust itself.
The representative of the GRANTOR is, in truth, a paid employee of the GRANTEE. In hundreds of thousands of cases, the authority is, therefore, misrepresented. It is now also coming to light that in tens of thousands of cases, the individuals signing these forms did not even sign their own names. The documents were made to look official because other mortgage servicing company employees signed as witnesses and then all four “signatures” were notarized by yet another mortgage servicing company employee. The titles were false, the signatures were forged, the “witnessing” was a lie, as was the notarization. Despite all of these false statements, the BIGGEST LIE on these documents is that the trust acquired the mortgage on the date stated plainly on the Mortgage Assignment. In truth, no such transfers ever took place as represented by these MERS certifying officers (or their stand-in forgers). The date chosen almost always corresponds not to an actual transfer, but to the date roughly corresponding to the time the loan went into default. The Mortgage Assignment was prepared only to provide “proof” that the trust owned the mortgage. Until courts require Trusts to come forward with actual proof that they acquired the mortgages in question, specifying whom they paid and how much they paid for each such trust-owned mortgage, the actual owner of these mortgages will never be known.
http://stopforeclosurefraud.com/2010/11/18/false-statements-r-k-arnold-mortgage-electronic-registration-systems/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ForeclosureFraudByDinsfla+%28FORECLOSURE+FRAUD+%7C+by+DinSFLA%29
Friday, November 5, 2010
DC AG Issues Opinion Letter Affecting MERS, DC Nonjudicial Foreclosures
Washington, D.C. Attorney General Peter Nickles issued an opinion letter asserting that certain notices used to commence foreclosures in DC may supposedly mislead homeowners and allegedly violate DC's consumer protection law. According to the DC AG, "a foreclosure may not be commenced against a DC homeowner unless the security interest of the current noteholder is properly supported by public filings with the District’s Recorder of Deeds."
A copy of the opinion letter is available at:
http://newsroom.dc.gov/show.aspx?agency=occ§ion=2&release=20673&year=2010&file=file.aspx%2frelease%2f20673%2fforeclosure%2520statement.pdf
According to the DC AG, "[a] noteholder’s security interest in a DC home should normally be reflected in the public land records maintained by the District’s Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS)."
As you may recall, DC has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a “Holder of the Note” and a “Security Instrument recorded in the land records of the District of Columbia.”
According to the DC AG, “[t]he homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record. ...When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District’s Consumer Protection Procedures Act, which is enforced by the attorney general."
The enforcement statement invites “homeowners or their advocates” to inform the Office of the Attorney General (OAG) if foreclosures “continue to be commenced or pursued with deceptive foreclosure sale notices” in order that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.
MERS issued a press release response, which is available at:
http://www.mersinc.org/news/details.aspx?id=250
A copy of the opinion letter is available at:
http://newsroom.dc.gov/show.aspx?agency=occ§ion=2&release=20673&year=2010&file=file.aspx%2frelease%2f20673%2fforeclosure%2520statement.pdf
According to the DC AG, "[a] noteholder’s security interest in a DC home should normally be reflected in the public land records maintained by the District’s Recorder of Deeds. Under District law, in contrast to the laws of many states, each deed or other document transferring a mortgage interest must be recorded with the Recorder of Deeds within 30 days of execution. This requirement is not satisfied by private tracking of mortgage interests through the Mortgage Electronic Registration Systems (MERS)."
As you may recall, DC has a non-judicial foreclosure process that begins with a Notice of Foreclosure on a form prescribed by the Recorder of Deeds. The form requires identification of a “Holder of the Note” and a “Security Instrument recorded in the land records of the District of Columbia.”
According to the DC AG, “[t]he homeowner who receives such a notice is entitled to presume that the recordation of the security interest complies with District law, and that each intermediate transfer of the security interest between the original maker of the note and the current holder of the note is documented in the public record. ...When a foreclosure sale notice misrepresents to a homeowner that the foreclosing noteholder has a recorded security interest, the homeowner may fail to seek legal help in determining whether there may be a good basis for challenging the foreclosure in court. Misrepresentations of material facts, when made to homeowners or other consumers, violate the District’s Consumer Protection Procedures Act, which is enforced by the attorney general."
The enforcement statement invites “homeowners or their advocates” to inform the Office of the Attorney General (OAG) if foreclosures “continue to be commenced or pursued with deceptive foreclosure sale notices” in order that the Office may consider bringing enforcement actions to stop foreclosure proceedings and seek restitution for consumers.
MERS issued a press release response, which is available at:
http://www.mersinc.org/news/details.aspx?id=250
Friday, August 27, 2010
MERS
http://stopforeclosurefraud.com/2010/08/27/exclusive-mers-deposition-of-secretary-and-treasurer-of-merscorp-42010/
Check out the deposition posted on this site, VERY interesting!!!!
Check out the deposition posted on this site, VERY interesting!!!!
Thursday, August 26, 2010
Los Angeles Signs On To MERS' Vacant-Property Registry
Los Angeles Signs On To MERS' Vacant-Property Registry
in News > Mortgage Servicing
by MortgageOrb.com on Wednesday 25 August 2010
This month, Los Angeles joined Virginia, Massachusetts and Connecticut in accepting the MERS System as an alternative to the city's registry of foreclosed properties and property preservation contacts for vacant properties.
"Many law enforcement agencies and municipalities already use the MERS System on an informal basis to find a loan's servicer and identify the companies responsible for maintaining vacant properties in their area," explains R. K. Arnold, president and CEO of MERSCORP Inc.
Current MERS members can use the system to register the identity of the property preservation company responsible for maintaining vacant properties, which are frequently in foreclosure. The MERS System can track both residential and commercial properties.
“Maintaining residential vacant properties in foreclosure is important to prevent blight and to protect property values,” adds Doug Guthrie, general manager of the Los Angeles Housing Department. “We’re able to see these benefits more quickly while saving on the city budget by partnering with MERS, whose system is immediately available and already in use by many property preservation companies.”
SOURCE: MERS
in News > Mortgage Servicing
by MortgageOrb.com on Wednesday 25 August 2010
This month, Los Angeles joined Virginia, Massachusetts and Connecticut in accepting the MERS System as an alternative to the city's registry of foreclosed properties and property preservation contacts for vacant properties.
"Many law enforcement agencies and municipalities already use the MERS System on an informal basis to find a loan's servicer and identify the companies responsible for maintaining vacant properties in their area," explains R. K. Arnold, president and CEO of MERSCORP Inc.
Current MERS members can use the system to register the identity of the property preservation company responsible for maintaining vacant properties, which are frequently in foreclosure. The MERS System can track both residential and commercial properties.
“Maintaining residential vacant properties in foreclosure is important to prevent blight and to protect property values,” adds Doug Guthrie, general manager of the Los Angeles Housing Department. “We’re able to see these benefits more quickly while saving on the city budget by partnering with MERS, whose system is immediately available and already in use by many property preservation companies.”
SOURCE: MERS
Sunday, August 22, 2010
MERS
Over 62 million mortgages are now held in the name of MERS, an electronic recording system devised by and for the convenience of the mortgage industry. A California bankruptcy court, following landmark cases in other jurisdictions, recently held that this electronic shortcut makes it impossible for banks to establish their ownership of property titles—and therefore to foreclose on mortgaged properties. The logical result could be 62 million homes that are foreclosure-proof. On May 20, 2010, in a bankruptcy case called In re Walker, Case no. 10-21656-E–11. The court held that MERS could not foreclose because it was a mere nominee; and that as a result, plaintiff Citibank could not collect on its claim.
http://stopforeclosurefraud.com/2010/08/18/homeowners-rebellion-could-62-million-homes-be-foreclosure-proof/
http://stopforeclosurefraud.com/2010/08/18/homeowners-rebellion-could-62-million-homes-be-foreclosure-proof/
Sunday, August 1, 2010
MERS
MERS – Mortgage Electronic Registration Inc. – holds approximately 60 million American mortgages and is a Delaware corporation whose sole shareholder is Mers Corp. MersCorp and its specified members have agreed to include the MERS corporate name on any mortgage that was executed in conjunction with any mortgage loan made by any member of MersCorp.
Thus in place of the original lender being named as the mortgagee on the mortgage that is supposed to secure their loan, MERS is named as the “nominee” for the lender who actually loaned the money to the borrower. In other words MERS is really nothing more than a name that is used on the mortgage instrument in place of the actual lender. MERS’ primary function, therefore, is to act as a document custodian.
MERS v. Nebraska Dept of Banking and Finance – State Appellate, MERS demands to be recognized as having no actionable interest in title. 2005, Cite as 270 Neb 529
Merscorp, Inc., et al., Respondents, v Edward P. Romaine, & c., et al., Appellants, et al., Defendant the fact that the Mortgage and Deed of Trust are separated is recognized (concurring opinion). While affirming MERS could enter in the records as “nominee”, the court recognized many inherent problems. Rather than resolve them, they sloughed them off to the legislature. 2006
The Boyko Decision -Federal District Judge Christopher Boyko of the Eastern Division of the Northern District of Ohio Federal Court overturns 14 foreclosure actions with a well reasoned opinion outlining the failure of the foreclosing party to prove standing. This decision started the movement of challenging the standing of the foreclosing party. Oct 2007
Landmark National Bank v Kesler – KS State Supreme Court – MERS has no standing to foreclose and is, in fact, a straw man. Oct 2009.
The importance of the findings of the Supreme Court of Kansas cannot be overemphasized. It is generally the law in all states that if the law of one state has not specifically addressed a specific legal issue that the court may look to the law of states which have. The Kansas Court acknowledged that the case was one of “first impression in Kansas”, which is why the Kansas Court looked to legal decisions from California, Idaho, New York, Missouri, and other states for guidance and to support its decision. As we have previously reported, the Ohio Courts have looked to the legal decisions of New York to resolve issues in foreclosure defense, most notably issues of standing to institute a foreclosure.
It is practically certain that this decision will be the subject of review by various courts. MERS has already threatened a “second appeal” (by requesting “reconsideration” by the Supreme Court of Kansas of its decision by the entire panel of Judges in that Court). However, for now, the decision stands, which decision is of monumental importance for borrowers. It thus appears that the tide is finally starting to turn, and that the courts are beginning to recognize the extent of the wrongful practices and fraud perpetrated by “lenders” and MERS upon borrowers, which conduct was engaged in for the sole purpose of greed and profit for the “lenders” and their ilk at the expense of borrowers.
MERS, Inc., Appellant v Southwest Homes of Arkansas, Appellee The second State Supreme Court ruling – AR 2009
BAC v US Bank – FL Appellate court upholds the concept of determining the standing of the foreclosing party before allowing summary judgement. All cases in FL must now go through this process. If you want to have fun, read the plaintiff’s brief. 2007
Wells Fargo NAS v Farmer Motion to vacate in Supreme Court, Kings County, NY 2009
In Re: Joshua & Stephanie Mitchell – US Federal Bankruptcy Court, NV 2009
In Re: Wilhelm et al., Case No. 08-20577-TLM (opinion of Hon. Terry L. Myers, Chief U.S. Bankruptcy Judge, July 9, 2009) – Chief US Bankruptcy Judge, ID – MERS, by its construction, separates the Deed from the Mortgage
MERS v Johnston – Vermont Superior Court Decision
Wells Fargo v Jordon – OH Appellate Court
Weingartner et al v Chase Home Finance et al – US District Court (Nev): Two pro se plaintiffs sue for relief re: MERS assignments. Very technical decision but two things are apparent. First, the court has little patience for pro se plaintiffs who throw everything out there wasting the court’s time and second, even though the court threw out most of what the plaintiffs were arguing for, they did side with the plaintiff. Provides a good insight to the court’s reasoning vis a vis MERS assignments. Also makes clear you shouldn’t try this from home. Please seek legal counsel.
Schneider et al v Deutsche Bank et al (FL): Class action suit (the filing) seeking to recover actual and statutory damages for violations of the foreclosure process. Provides an excellent description of the securitization process and the problems with assignments. Any person named as a defendant in a suit by Deutsche Bank should contact the firms involved for inclusion in this suit.
JP Morgan Chase v New Millenial et. al. – FL Appellate which clearly demonstrates the chaos which can ensue when there is a failure to register changes of ownership at the county recorder’s office. Everyone operates in good faith, then out of nowhere, someone shows up waving a piece of paper. The MERS system, while not explicitly named, is clearly the culprit of the chaos. 2009
In Re: Walker, Case No. 10-21656-E-11 – Eastern District of CA Bankruptcy court rules MERS has NO actionable interest in title. “Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.” “MERS could not, as a matter of law, have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp.” The Court’s opinion is headlined stating that MERS and Citibank are not the real parties in interest.
In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.
In Re: Joshua and Stephanie Mitchell, Case No. BK-S-07-16226-LBR [U.S. Bankruptcy Court, District of Nevada, Memorandum Opinion of August 19, 2008]. Federal Court in Nevada attacked MERS’ purported “authority”, finding that there was no evidence that MERS was the agent of the note’s holder
Mortgage Electronic Registration Systems, Inc. v. Girdvainis, Sumter County, South Carolina Court of Common Pleas Case No. 2005-CP-43-0278 (Order dated January 19, 2006, citing to the representations of MERS and court findings in Mortgage Electronic Registration Systems, Inc. v. Nebraska Dept. of Banking and Finance, 270 Neb. 529, 704 NW 2d. 784). As such, ALL MERS assignments are suspect at best, and may in fact be fraudulent. The Court of Common Pleas of Sumter County, South Carolina also found that MERS’ rights were not as they were represented to be; that MERS had no rights to collect on any debt because it did not extend any credit; none of the borrowers owe MERS any money; that MERS does not own the promissory notes secured by the mortgages; and that MERS does not acquire any loan or extension of credit secured by a lien on real property.
http://stopforeclosurefraud.com/mers-101/
Thus in place of the original lender being named as the mortgagee on the mortgage that is supposed to secure their loan, MERS is named as the “nominee” for the lender who actually loaned the money to the borrower. In other words MERS is really nothing more than a name that is used on the mortgage instrument in place of the actual lender. MERS’ primary function, therefore, is to act as a document custodian.
MERS v. Nebraska Dept of Banking and Finance – State Appellate, MERS demands to be recognized as having no actionable interest in title. 2005, Cite as 270 Neb 529
Merscorp, Inc., et al., Respondents, v Edward P. Romaine, & c., et al., Appellants, et al., Defendant the fact that the Mortgage and Deed of Trust are separated is recognized (concurring opinion). While affirming MERS could enter in the records as “nominee”, the court recognized many inherent problems. Rather than resolve them, they sloughed them off to the legislature. 2006
The Boyko Decision -Federal District Judge Christopher Boyko of the Eastern Division of the Northern District of Ohio Federal Court overturns 14 foreclosure actions with a well reasoned opinion outlining the failure of the foreclosing party to prove standing. This decision started the movement of challenging the standing of the foreclosing party. Oct 2007
Landmark National Bank v Kesler – KS State Supreme Court – MERS has no standing to foreclose and is, in fact, a straw man. Oct 2009.
The importance of the findings of the Supreme Court of Kansas cannot be overemphasized. It is generally the law in all states that if the law of one state has not specifically addressed a specific legal issue that the court may look to the law of states which have. The Kansas Court acknowledged that the case was one of “first impression in Kansas”, which is why the Kansas Court looked to legal decisions from California, Idaho, New York, Missouri, and other states for guidance and to support its decision. As we have previously reported, the Ohio Courts have looked to the legal decisions of New York to resolve issues in foreclosure defense, most notably issues of standing to institute a foreclosure.
It is practically certain that this decision will be the subject of review by various courts. MERS has already threatened a “second appeal” (by requesting “reconsideration” by the Supreme Court of Kansas of its decision by the entire panel of Judges in that Court). However, for now, the decision stands, which decision is of monumental importance for borrowers. It thus appears that the tide is finally starting to turn, and that the courts are beginning to recognize the extent of the wrongful practices and fraud perpetrated by “lenders” and MERS upon borrowers, which conduct was engaged in for the sole purpose of greed and profit for the “lenders” and their ilk at the expense of borrowers.
MERS, Inc., Appellant v Southwest Homes of Arkansas, Appellee The second State Supreme Court ruling – AR 2009
BAC v US Bank – FL Appellate court upholds the concept of determining the standing of the foreclosing party before allowing summary judgement. All cases in FL must now go through this process. If you want to have fun, read the plaintiff’s brief. 2007
Wells Fargo NAS v Farmer Motion to vacate in Supreme Court, Kings County, NY 2009
In Re: Joshua & Stephanie Mitchell – US Federal Bankruptcy Court, NV 2009
In Re: Wilhelm et al., Case No. 08-20577-TLM (opinion of Hon. Terry L. Myers, Chief U.S. Bankruptcy Judge, July 9, 2009) – Chief US Bankruptcy Judge, ID – MERS, by its construction, separates the Deed from the Mortgage
MERS v Johnston – Vermont Superior Court Decision
Wells Fargo v Jordon – OH Appellate Court
Weingartner et al v Chase Home Finance et al – US District Court (Nev): Two pro se plaintiffs sue for relief re: MERS assignments. Very technical decision but two things are apparent. First, the court has little patience for pro se plaintiffs who throw everything out there wasting the court’s time and second, even though the court threw out most of what the plaintiffs were arguing for, they did side with the plaintiff. Provides a good insight to the court’s reasoning vis a vis MERS assignments. Also makes clear you shouldn’t try this from home. Please seek legal counsel.
Schneider et al v Deutsche Bank et al (FL): Class action suit (the filing) seeking to recover actual and statutory damages for violations of the foreclosure process. Provides an excellent description of the securitization process and the problems with assignments. Any person named as a defendant in a suit by Deutsche Bank should contact the firms involved for inclusion in this suit.
JP Morgan Chase v New Millenial et. al. – FL Appellate which clearly demonstrates the chaos which can ensue when there is a failure to register changes of ownership at the county recorder’s office. Everyone operates in good faith, then out of nowhere, someone shows up waving a piece of paper. The MERS system, while not explicitly named, is clearly the culprit of the chaos. 2009
In Re: Walker, Case No. 10-21656-E-11 – Eastern District of CA Bankruptcy court rules MERS has NO actionable interest in title. “Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.” “MERS could not, as a matter of law, have transferred the note to Citibank from the original lender, Bayrock Mortgage Corp.” The Court’s opinion is headlined stating that MERS and Citibank are not the real parties in interest.
In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.
In Re: Joshua and Stephanie Mitchell, Case No. BK-S-07-16226-LBR [U.S. Bankruptcy Court, District of Nevada, Memorandum Opinion of August 19, 2008]. Federal Court in Nevada attacked MERS’ purported “authority”, finding that there was no evidence that MERS was the agent of the note’s holder
Mortgage Electronic Registration Systems, Inc. v. Girdvainis, Sumter County, South Carolina Court of Common Pleas Case No. 2005-CP-43-0278 (Order dated January 19, 2006, citing to the representations of MERS and court findings in Mortgage Electronic Registration Systems, Inc. v. Nebraska Dept. of Banking and Finance, 270 Neb. 529, 704 NW 2d. 784). As such, ALL MERS assignments are suspect at best, and may in fact be fraudulent. The Court of Common Pleas of Sumter County, South Carolina also found that MERS’ rights were not as they were represented to be; that MERS had no rights to collect on any debt because it did not extend any credit; none of the borrowers owe MERS any money; that MERS does not own the promissory notes secured by the mortgages; and that MERS does not acquire any loan or extension of credit secured by a lien on real property.
http://stopforeclosurefraud.com/mers-101/
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