Editor: David Reiss
Brooklyn Law School

February 11, 2013

Federal District Court in Idaho Rule for Banks/MERS in Foreclosure Case

By Rafe Serouya

In Washburn v. Bank of America, N.A., 1:11-CV-00193-EJL, 2011 WL 7053617 (D. Idaho Oct. 21, 2011), the Idaho District Court recommended that the Defendants’ Motion to Dismiss be granted. Plaintiff Homeowner had defaulted on her loan and received a notice of default. Plaintiff sought quiet title to the property, challenged the transfer of the loan ownership, and contended that MERS did not have the authority to appoint a successor trustee to the Deed or to carry out a non-judicial foreclosure. The Court found that even though “the right to enforce the mortgage by foreclosure had expired by limitation, the plaintiff was required, in equity, to pay the mortgage debt to obtain relief under a quiet title action. The securitization of the loan and its transfer to another entity did not extinguish the security interest or otherwise impact the ability to foreclose on the trust deed. Also, for the purpose of the quiet title action, “the fact that MERS is named as the beneficiary does not change the rights or obligations of [Plaintiff] with regard to the Property.” Plaintiff’s argument that MERS lacks standing was misplaced since Plaintiff focused on the ability of MERS to enforce the right to payment. “But foreclosing on a trust deed is distinct from the collection of the obligation to pay money.” Additionally, there was no issue with MERS’s initiated foreclosure because foreclosure was initiated in the name of the lenders. MERS was also found to have the ability to appoint a successor trustee because the Deed of Trust expressly allowed MERS to do so.

On January 17, 2012, appeal by the Plaintiff was taken into consideration by the Court. The above Report and Recommendation was Incorporated and Adopted. The Defendants’ Motion to Dismiss was granted and the case was dismissed. Washburn v. Bank of America (January 17 2012).

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