Arkansas Court Denies MERS’ Motion to Set a Decree of Foreclosure
The Arkansas court in MERS v. Southwest Homes of Arkansas, 301 S.W.3d 1 (2009) denied MERS’ motion to set a decree of foreclosure, therein affirming the decision from the lower court. As the record beneficiary of the deed of trust, MERS received no foreclosure notice. The court in their finding, applied Arkansas law, and found that the lender was the deed of trust beneficiary not MERS, since MERS did not receive payment of the debt.
MERS alleged that the lower court erred in ordering foreclosure because as the holder of legal title it was a necessary party that was never served. However, In affirming the lower court decision, the court disregarded the written terms of the mortgage contract that selected MERS as the deed of trust beneficiary entitled to notice.
The court went on further to hold that under the recorded deed of trust in this case, James C. East, as trustee under the deed of trust, held legal title. Moreover, as the court reasoned, MERS was at most the mere agent of the lender Pulaski Mortgage Company, Inc., and it held no property interest and was not a necessary party.
September 13, 2013 | Permalink | No Comments
September 12, 2013
Just Shoot Me
Florida Twelfth Judicial Circuit Magistrate Bailey issued a Recommended Order in HSBC Bank USA, National Association, et al. v. Marra, No. 2008 CA 000630 NC (Aug. 14, 2013) that makes you want to give up. Not because of the judge, but because of what she documents in what is in all likelihood a run of the mill foreclosure in Florida.
Somewhat amazingly, the defendant was unrepresented but was able to get the Court to focus on various inconsistencies in the court filings and implausible assertions made by the Plaintiff, particularly those relating to whether the plaintiff owned and held the note and mortgage as it alleged in the complaint.
It would require about as many words to summarize the opinion as are in it, so I refer you to the link above if you want to see it in all of its glory. Let me leave you with the Court’s conclusion:
After taking into consideration the above-cited information from the [Pooling and Servicing Agreement], it appears that the transfers that have been variously asserted by the Plaintiff in several Motions and/or documents attached to those Motions as conferring standing upon it could not possibly have occurred as the Plaintiff represents. Further, the Magistrate cannot conceive of any manner in which the Plaintiff could possibly create additional documentation in an effort to manufacture standing in this action. (5)
Said less politely, the Plaintiff appear to have lied to the Court or at least been unbelievably negligent in preparing its papers. The Court also had these things to say about the Plaintiff’s filings:
- the procedural history recounted by the Plaintiff in its Motion is inaccurate. (4)
- it is not even likely that GreenPoint was the “owner and holder” of Marra’s loan documents at the time this case was filed in 2008, as was alleged in the original Complaint. (4)
As a law professor, I teach students about the importance of procedure to the functioning and legitimacy of our system of adjudication. Reading cases like this, replete with a factual summary of obfuscation and possibly outright lies, I wonder what the lesson is that we should take away from the foreclosure epidemic.
One lesson is that you can say anything you want in court and you are unlikely to be punished even if you are caught. If that is the lesson we are left with, just shoot me now.
An alternative lesson is that we should severely punish those who treat the courthouse as no better than a white-collar fight cage where trained mercenaries lord it over ill-prepared amateurs, with no holds barred. If that is the one we take, lower your gun, roll up your sleeves and start thinking about what a well-functioning judicial system would look like for unrepresented parties in civil suits, such as homeowners in foreclosure and consumers facing debt collectors.
[HT April Charney]
September 12, 2013 | Permalink | No Comments
September 11, 2013
Reiss on the Future of Fannie and Freddie
I will be speaking at NYU Law next week on
The Future of Fannie and Freddie
Friday, September 20, 2013
9:00 am – 5:00pm
Reception to follow
Greenberg Lounge, NYU School of Law
40 Washington Square South
New York, NY 10012
Jointly sponsored by:
The Classical Liberal Institute & NYU Journal of Law & Business
This conference will bring together leaders in law, finance, and economics to explore the challenges to investment in Fannie Mae and Freddie Mac, and the future possibilities for these government-sponsored entities (GSEs). Panels will focus on the reorganization of Fannie and Freddie, as well as the recent litigation surrounding the Treasury’s decision to “wind down” these GSEs. Panelists will explore the legal issues at stake in the wind down, including the administrative law and Takings Clause arguments raised against the Treasury and Federal Housing Finance Agency. Panelists will also look at economic policy and future prospects for Fannie and Freddie in light of legislation proposed in the House and the Senate.
Conference Panels:
- The Reorganization of Fannie Mae and Freddie Mac
- Fannie Mae, Freddie Mac, and Administrative Law
- Conservatorship and the Takings Clause
- The Future of Fannie and Freddie
Confirmed Participants:
- Professor Barry Adler (NYU)
- Professor Adam Badawi (Washington University)
- Professor Anthony Casey (Chicago)
- Charles Cooper (Cooper & Kirk PLLC)
- Professor Richard Epstein (NYU)
- Randall Guynn (Davis Polk & Wardwell LLP)
- Professor Todd Henderson (Chicago)
- Professor Troy Paredes (former SEC Commissioner)
- Professor David Reiss (Brooklyn)
- Professor Lawrence White (NYU Stern)
September 11, 2013 | Permalink | No Comments
September 9, 2013
Arizona Court Grants Summary Judgment in Favor of MERS in Show Me the Note Claim
The Arizona court in deciding the case of Sparlin v. BAC Home Loans Servicing, CA-CV-2010-0173 (Ct. Ap. AzDiv. 2, 2011), had to consider arguments based on the theory of ‘show me the note.’ Sparlin had appealed the lower court decision to grant summary judgment to MERS. Upon reconsideration, the court affirmed the lower court decision and granted summary judgment.
In arguing their ‘show me the note’ claim, the borrowers alleged that MERS was required to actually prove that it was in possession of the original promissory note in order to execute a substitution of trustee appointing Recon-Trust as the substitute trustee and executing an assignment to BAC Home Loans Servicing. These were the documents that allowed the trustee to initiate foreclosure.
The court, in affirming the lower court’s dismissal, found that MERS, as the beneficiary on the deed of trust, had the right to enforce the security instrument. Additionally, the court found that under Arizona law, it was not required of MERS to be the note holder.
September 9, 2013 | Permalink | No Comments
Arizona Court Affirms a Lower Court Decision That Possession of Note Was Not Needed for a Party to Initiate a Non-Judicial Foreclosure
The Arizona court in Maxa v. Countrywide Loans, Inc., 2010 WL 2836958 (D. Ariz. 2010) affirmed a lower court decision that possession of the note was not needed for a party to initiate a non-judicial foreclosure. The court also affirmed that MERS had the authority under the deed of trust to commence foreclosure.
The court in reaching their decision rejected the plaintiff‘s claim that the defendants lacked the right to enforce the note; therein making the foreclosure was invalid. The court noted that a trustee’s sale was not an action to enforce the note, but rather it was an exercise of the power of sale upon default.
The court explicitly held that Arizona law bestowed power of sale on the trustee upon default or breach of the contract secured by the trust deed without reference to enforcing or producing a note or other negotiable instrument.
The court in reaching their decision also found that the plaintiff not only gave the power of sale to the trustee, but also agreed to empower MERS, as the lender’s nominee, to exercise the right to foreclose. Lastly, the court directly rejected the plaintiff’s claims of fraudulent misrepresentation based upon the notion that MERS was not a valid beneficiary.
September 9, 2013 | Permalink | No Comments
September 13, 2013
United States District Court, Eastern District of Arkansas Dismisses Borrower’s Claim of Invalid Assignment
By Ebube Okoli
The United States District Court, Eastern District of Arkansas in Kimberly Peace v. MERS, 4:09-cv-00966 (2010) granted MERS’ motion to dismiss. The court found that the assignment to MERS was valid.
This also led the court to decide that BAC had standing to appoint Recon Trust as BAC’s agent to exercise its right to start a non-judicial foreclosure. The borrower unsuccessfully alleged that the assignment from MERS to BAC had no legal effect as MERS was not on the note and was not an agent for the note holder. The court rejected this contention.
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September 13, 2013 | Permalink | No Comments