Editor: David Reiss
Brooklyn Law School

December 31, 2012

Mortgagee Lacks Standing to Challenge Assignments in Texas

By Karl Dowden

Bridges v. JP Morgan Chase Bank, N.A., et al., No. A-12-CA-635-SS (W.D. Tex Sept. 21, 2012), is a recently decided federal district court decision in Texas. The Western District Court in Austin granted the defendant’s motion to dismiss the plaintiff’s suit. The plaintiff, Bridges, is suing a number of financial entities including Chase Bank and MERS.

The plaintiff alleged that the initial transfer of her mortgage to MERS was not a proper transfer because MERS does not hold the note (MERS only held the deed of trust). However, this court relied on cases that held Texas foreclosure law enforces the deed of trust, not the underlying note. Additionally, Texas does not require possession of the original promissory note as a prerequisite to foreclosure.

The defendants also argued that the Bridges lacked standing to challenge the validity of the assignments of the note and deed. A number of Texas Federal District Courts held since the mortgagee was not a party to the assignments, they do not have standing to challenge the validity of the assignments. This Court rejected plaintiff’s reliance on a California Southern District court holding because the holding relied on California state law and was distinguishable because the plaintiff of the California case claimed deficiencies in the assignment that resulted in high payments to the wrong entity.

Bridges also alleged various fraud and misrepresentation claims that were either inapplicable (a statutory fraud claim applying to real estate does not apply to loan transactions), or does not fulfill the required elements (a negligent misrepresentation claim is dismissed because plaintiff did not rely to her detriment). A claim of filing a fraudulent lien was dismissed because the Bridges lacked standing to challenge the assignment (since she was not a party to it).

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