Editor: David Reiss
Brooklyn Law School

November 29, 2012

Texas Appellate Court Holds that Formal Transfer of Deed is Not Required to Initiate Foreclosure

By Karl Dowden

In Robeson v. Mortgage Electronic Registration Systems, Inc., No. 02-10-00227-CV (Tex. App. –Fort Worth [2nd Dist.] 2012, pet. denied), the Texas Court of Appeals affirmed a summary judgment motion by MERS and the Midfirst bank granted by the trial court. The homeowner plaintiff argued that the bank did not have standing to accelerate the loan and begin foreclosure on January 2009 because the deed of trust was assigned to the Bank on February 2009 and there was no evidence of an endorsement of the note (the note contained a blank endorsement).

The Court of Appeals held that, as to the blank endorsement in the note, no special endorsement is necessary under the Texas Business and Commercial Code, only possession of the note. Two vice presidents of Midfirst bank testified that the bank held both the note and the deed of trust. In addition, one testified that both the note and deed of trust were received on October 2008. Since the plaintiff did not challenge the accuracy of the statements made, the court found that the evidence was sufficient. The court also held that the date the deed of trust was assigned does not create a factual issue of when the interests were transferred to the bank relying on a prior holding that an assignment of the deed of trust from MERS to a lender dated two years after the actual date of transfer does not raise a factual issue of whether the assignment was fabricated. The court held that the date of transfer is not evidence of when the bank is entitled to initiate foreclosure relying on prior holdings which found that the mortgage typically follows the note it secures.

The deed of trust granted both the lender and the beneficiary various lender’s rights in the agreement, particularly the power of sale. As a result, the court stated that MERS was authorized to exercise the right to invoke the power of sale in the deed of trust.

The Texas Supreme Court recently denied the petition for review of this case.

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