Editor: David Reiss
Brooklyn Law School

March 2, 2013

Florida Appellate Court Holds Bank Has Standing to Foreclose because MERS Properly Assigned the Note to it and Lack of Ownership of the Beneficial Interest in the Note Does Not Deprive an Assignee of Standing

By Max Feder

In Taylor v. Deutsche Bank Nat. Trust Co., 44 So.3d 618 (2010), the Fifth District Court of Appeal of Florida held Deutsche Bank Nat. Trust Co. (“Deutsche Bank”) had standing to foreclose because MERS properly assigned the note to it and a lack of a beneficial interest in the note does not deprive an assignee of standing in a foreclosure action.

Taylor (“Borrower”) executed a note and mortgage in favor of First Franklin, a division of National City Bank of Indiana (“First Franklin”).  The mortgage identified MERS as nominee for First Franklin.  MERS, as nominee for First Franklin, assigned the mortgage to Deutsche Bank.

Following Borrower’s default under the note, Deutsche Bank commenced foreclosure, and moved for summary judgment.  Borrower argued Deutsche Bank lacked standing to foreclose alleging that the note was not assigned to Deutsche Bank and that the mortgage was not properly assigned to Deutsche Bank.  Specifically, Borrower argued that because the note was not indorsed and neither contained an allonge nor a specific assignment, the note was payable to First Franklin, and therefore, Deutsche Bank lacked standing to enforce it.  Borrower argued that under Florida Law, only the “holder” in due course could seek foreclosure.

The Court disagreed, however, and held that ownership of a beneficial interest in the note is not required to commence foreclosure.  Standing to foreclose may be derived either by being the holder of the note or a nonholder in possession who has the rights of a holder.  Here, the mortgage granted MERS the status of a nonholder in possession with the rights of a holder (the case did not elaborate on how MERS came to be in possession of the note).  Although MERS was not the party seeking foreclosure, the written assignment explicitly passed the right to enforce the note to Deutsche Bank.  As a result, the Court held that MERS properly assigned the note and mortgage to Deutsche Bank, and therefore, Deutsche Bank had standing to foreclose.

| Permalink