Author Archives: Ebube Okoli

Ohio Court Dismisses Plaintiff’s Claim That Defendant Lacked Standing to Foreclose

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The Ohio court in Turner v. Lerner, Sampson & Rothfuss, 776 F.Supp.2d 498 (2011) granted in part and denied in part the defendant’s motion to dismiss. The plaintiffs alleged that defendant [Lerner] engaged in the widespread practice of filing and prosecuting mortgage foreclosure actions, although many of Lerner’s clients lacked proper standing to sue.

The United States District Court, N.D. Ohio considered the plaintiff’s claims that there were violations of FDCPA and Ohio unfair practices act violations, based on the law firm’s filing of foreclosure lawsuits where its clients allegedly lacked proper standing because the law firm client’s employees executed allegedly fraudulent assignments of mortgages from non-party MERS.

In following recent Ohio case law, the court dismissed the case due to the plaintiff’s lack of standing the validity of the assignments of mortgages. The court noted that it was generally accepted law that a litigant who is not a party to an assignment lacks standing to challenge assignment of that note.

United States District Court Dismisses Plaintiff’s Contentions Against MERS, Alleging Wrongful Foreclosure and Unfair Business Practices

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The United States District Court for the Northern District of California in deciding Pantoja v. Countrywide Home Loans, et al. 5:09cv016015 (N.D. Cal., 2009) affirmed MERS’ authority to foreclose. MERS’ ability to foreclose was again affirmed in this case, contrary to plaintiff contentions alleging wrongful foreclosure, unfair business practices, failure to disclose information regarding the plaintiff’s loan, claims arising under TARP, and various violations of state law related to the Notice of Default and the trustee sale.

The Court granted MERS’ motion to dismiss on several grounds. One ground was that the court concluded that the plaintiff lacked standing to bring the suit because he failed to tender the amounts due and owing under the note. The court also held that the plaintiff did not have a private right of action under TARP, and that his claims for unfair business practices were not supported by any facts.

The court also denied the claims for wrongful foreclosure. Accordingly, the court found that under state law, there was no requirement for the production of an original promissory note prior to the initiation of a non-judicial foreclosure. So, the absence of an original promissory note in a non-judicial foreclosure does not render a foreclosure invalid.

California Court Rules That State Law Did Not Require Possession of the Promissory Note in Order to Initiate a Non-Judicial Foreclosure

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The Eastern District of California in deciding Chilton v. Federal National Mortgage Association, No. 1:09; 2187 (E.D. Cal., 2010) dismissed the plaintiff’s complaint claiming wrongful foreclosure and lack of standing. The court held that California law did not require possession of the promissory note in order to initiate a non-judicial foreclosure.

Although MERS was not explicitly named as a defendant in the action, the plaintiff argued that MERS lacked standing to foreclose since the note and deed of trust had been separated. The court rejected this argument.

California Court Held That State Law Did Not Require Possession of the Note as a Precondition for Initiating a Foreclosure Sale

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The Los Angeles County Superior Court in deciding Linares, et al. v. JLM Corporation, et al., No. YC060372 (2009), after considering the plaintiff’s contentions, rejected them in favor of the defendant’s argument. In accepting the defense’s argument, the court held that California law did not require the possession of the original note as a precondition for initiating a foreclosure sale.

Additionally, the court found that under California law, an “allegation that the trustee did not have the original note or had not received it, is insufficient to render the foreclosure proceeding invalid.”

California Court Finds that MERS Was Not Liable for Wrongful Foreclosure, Breach of Contract, and Breach of the Implied Covenants of Good Faith and Fair Dealing

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The United States District Court for the Central District of California hearing Gaitan v. MERS, et al, 09-1009 (C.D. Cal. 2009) found that MERS had the right to initiate foreclosure proceedings. The court also found that MERS was not liable for claims including wrongful foreclosure, breach of contract, and breach of the implied covenants of good faith and fair dealing.

The plaintiff alleged that several flaws in the documents he received proved the mortgage loans were obtained by fraud. Specifically, he alleged that neither the adjustable rate mortgage loan documents nor the truth in lending disclosure statement “clearly and conspicuously disclosed”: (1) the actual interest rate on which the scheduled payments were based; “(2) that making the payments according to the payment schedule listed in the TILD will result in negative amortization and that the principal balance will increase; and (3) that the payment amounts listed on the TILD are insufficient to pay both principal and interest.”

The plaintiff alleged that not only were the disclosure statements “unclear and inconspicuous,” but they were “deceptive” and “based in order to mislead and deceive plaintiff into believing that he would be getting a loan with a low fixed payment rate that would be sufficient to pay both interest and principal.” The court examined each of the claims in the plaintiff’s argument in turn, and determined that the plaintiff failed to argue the viability of any of the claims.

California Court Rules That MERS Did Not Breach the Implied Covenant of Good Faith By Initiating Non-Judicial Foreclosure

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The United States District Court for the Northern District of California in Winter v. Chevy Chase Bank, No. C 09-3187 SI (N.D. Cal. 2009) found that despite the plaintiff’s allegations, MERS had not committed negligence or breached the implied covenant of good faith and fair dealing when it initiated non-judicial foreclosure proceedings against the plaintiff.

Plaintiff Gwendolyn Winter initiated an action in state court against defendants Chevy Chase Bank, Gabrielle Benedetto; U.S. Bank N.A. as Trustee for CCB Libor Series 2005-C Trust; MERS; as well as several unnamed defendants. The plaintiff alleged federal and state law claims related to the mortgage, mortgage default, foreclosure, and sale of plaintiff’s primary residence.

Plaintiff also filed suit against defendants in alleging negligence; breach of contract; breach of fiduciary duty; intentional infliction of emotional distress; fraud and misrepresentation; violations of state and federal lending laws; false advertising and unfair competition under federal and state law; and federal RICO violations. However, after considering the plaintiff’s contentions, the court eventually dismissed the claims.

United States District Court for the Central District of California Finds hat MERS Was the Beneficiary and Entitled to Foreclose

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The United States District Court for the Central District of California in Derakhshan v. MERS, No. SACV08-1185 AG (2009) found that MERS was the beneficiary and therefore entitled to foreclose. This case, like many others before this court, involved the sale of an option adjustable rate mortgage loan.

The court held that MERS was the named beneficiary in the deed of trust. By signing the deed, the plaintiff thus agreed that MERS would be the beneficiary and act as nominee for the lender. Further, the deed explicitly stated that the borrower understood and agreed that MERS held only legal title and had the right: to exercise any or all of those interests, including but not limited to, the right to foreclose and sell the property.

Thus, the plaintiff explicitly authorized MERS to act as beneficiary with the right to foreclose on the property.