Editor: David Reiss
Brooklyn Law School

February 17, 2013

District Court of North Dakota Finds MERS has Standing to Foreclose, Rejects All Twelve of Plaintiff’s Challenges

By Joseph Kelly

In Bray v. Bank of Am., 1:09-CV-075, 2011 WL 30307 (D.N.D. Jan. 5, 2011) appeal dismissed, 435 F. App’x 571 (8th Cir. 2011), the court denied plaintiff’s ten motions, including his motion for summary judgment, and granted defendants’, Bank of America and Countrywide Home Loans, motion for summary judgment.

Plaintiff, Thomas Bray, received a loan from America’s Home Loans (“AHL”), and the corresponding mortgage listed MERS as the mortgagee. The proceeds of the loan were distributed to Security State Bank, a third party individual, and plaintiff Bray, who conceded that he used the funds to pay for his living expenses. Bank of America’s witness testified that the note was then transferred from AHL to Decision One Mortgage, Decision One then transferred its interest to Bank of America, roughly one month later Bank of America transferred its ownership interest to Bank of New York Melon, but remained the servicer of the note and the mortgage. MERS’ witness corroborated that their records showed that Bank of New York Mellon was the current beneficial owner of the note.

Plaintiff challenged the current foreclosure action under twelve different theories, including disputing the ownership of the note and mortgage, violations of the FDCPA, TILA, and claiming allodial title.

First, the court found that under the North Dakota Century Code, MERS had standing to foreclose as it owned both the note and the mortgage. The ensuing assignments did not change the fact that MERS was both the mortgagee and nominee for the original lender and its successors and assignees.

The court also rejected plaintiff’s Fair Debt Collection Practices Act claim, finding that both Bank of America and MERS were not subject to the FDCPA as their activities did not constitute “debt collection” as defined in the statute. Additionally, AHL was explicitly excluded from the FDCPA as they were the original creditor. 15 U.S.C. §1629a(6)(F)(ii).

Plaintiff’s Truth In Lending Act (TILA) claim, that he had exercised his right to rescission under 12 C.F.R. §226.15, was also dismissed. The court found as a matter of law plaintiff had missed the three-day period to exercise his right of rescission by approximately three years.

In addition, the court rejected plaintiff’s claim that defendants had not produced the “wet ink” originals of the note and mortgage as they had been presented to him at a previous deposition.

They also found his claim that the transaction lacked consideration since the Federal Reserve Notes received were not backed by any hard asset “patently frivolous.” In addition the court rejected his claims that Bank of America acted ultra vires, that the defendants had violated the RICO Act as the loan was not connected to any gambling activities, and that the interest rates were usurious. Finally, the court rejected plaintiff’s claims of fraud, acquiescence by the defendants, violations of the Real Estate Settlement Procedures Act, and plaintiff’s claim to allodial title, which the court described as a “concept which has no place in modern American law.”

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