Editor: David Reiss
Brooklyn Law School

February 11, 2013

Federal District Court in Idaho Grants Defendants (Bank et. al.) Motion to Dismiss in Foreclosure Case

By Rafe Serouya

In Cherian v. Countrywide Home Loans, 1:12-CV-00110-BLW, 2012 WL 2865979 (D. Idaho July 11, 2012), the Court granted Defendants’ motion to dismiss and denied Plaintiff Homeowner’s motion for a temporary restraining order and motion to amend his complaint.

Plaintiff sought to enjoin the foreclosure sale of his property on multiple grounds.

  1. The Court held that P could not quiet title. He had “not alleged an ability or willingness to tender the balance due on the loan” which was fatal to his claim. Additionally the court explained that P’s allegations that U.S. Bank failed to follow the applicable non-judicial foreclosure statutes does not excuse his lack of tender or otherwise save his claim.
  2. Plaintiff did not allege any facts to support his claim that Defendants failed to comply with Idaho’s foreclosure statutes
  3. Securitization of the Note did not impact the right to foreclose and did not discharge the Plaintiff’s obligation to repay the loan
  4. The Court held, consistent with its holding in Trotter v. Bank of New York Mellon, (see earlier post), that proof of Note ownership is not a prerequisite to initiating a non-judicial foreclosure proceeding on a deed of trust.
  5. The Court held that splitting the Note and Deed of Trust did not extinguish the right to foreclose. The Court explained that “use of the MERS system does not eliminate a party’s right to foreclose – even accepting the premise that use of MERS splits the note from the deed.
  6. The Court concluded that MERS “had the authority to assign its beneficial interest in the deed of trust to the foreclosing bank.”
  7. The Court held, as it had done before, that the “activity of foreclosing on [a] property pursuant to a deed of trust is not the collection of a debt within the meaning of the” Fair Debt Collection Practices Act (“FDCPA”), and lenders and mortgage companies are not “debt collectors” within the meaning of the FDCPA. Moreover, “MERS’ role as beneficiary of the Deed of Trust was established at the loan’s origination prior to [Plaintiff’s] default, and therefore it is also exempt under the FDCPA
  8. Plaintiff failed to allege a violation of the Idaho Consumer Protection Act.
  9. Plaintiff alleged that U.S. Bank violated the Truth in Lending Act (“TILA”), but he did not allege that the Bank’s failure to provide notice “within 30 days after the date on which the mortgage loan was sold or otherwise transferred or assigned by Defendant MERS,” caused him to incur actual damages.
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