April 9, 2013
United States District Court of Nevada Holds that under Nevada Law, Foreclosure Proceedings can be Commenced by the Beneficiary
In Ramos v. MERS, No. 2:08-CV-1089, 2009 WL 5651132 (D. Nev. Mar. 5, 2009), court concluded that, under Nevada law, foreclosure proceedings can be commenced by “the beneficiary, the successor in interest of the beneficiary, or the trustee” and, thus, that MERS had a right to foreclose. Since the deed of trust expressly named MERS as beneficiary, MERS had the right to commence foreclosure and to appoint the substitute trustee. In their purchase of a home, homeowners made a loan and the deed of trust on the loan with Bayporte designated MERS as the beneficiary, and authorized MERS to act as a nominee. MERS then executed a Substitution of Trustee, naming Cal-Western as the trustee under the Deed of Trust. Cal-Western issued and recorded a “Notice of Breach and Default and of Election to Cause Sale of Real Property Under Deed of Trust.” The property was sold at a trustee’s sale. Homeowners claimed that the foreclosure on their home was wrongful and alleged that the party that authorized the foreclosure was not authorized to do so, that the sale was not carried out in accordance with Nevada law, and that Nevada law authorizing non-judicial foreclosures and Defendants’ actions in accordance therewith violate Plaintiffs’ rights to procedural and substantive due process. The court dismissed this claim because they found that MERS was empowered to foreclose on the property and to appoint Cal-Western as substitute trustee for purpose of conducting the foreclosure.
April 9, 2013 | Permalink | No Comments
U.S. Bankruptcy Court of Western District Missouri Holds that Agency Relationship created when MERS is Designated as a Nominee
In re Tucker, 441 B.R. 638 (Bankr. W.D. Mo. 2010), court held that designation of MERS as a nominee in the Mortgage is “more than sufficient to create an agency relationship between MERS and the Lender and its successors in Missouri” and that MERS may exercise any rights that the Lender may exercise under the Mortgage. The case arose from a challenge made by the Chapter 7 trustee. The Trustee asserted that the movant was not the holder of both the Note and Deed of Trust on the date of the bankruptcy filing, that the Note and Deed of Trust were split as of that date, and that the Deed of Trust is now unenforceable. The Debtor had signed an Adjustable Rate Note and a Deed of Trust, which identifies the Lender as “New Century Mortgage Corporation. The Deed of Trust goes on to state that the beneficiary of the Deed of Trust is MERS as “nominee” for the Lender and its successors and assigns.That Deed of Trust was properly recorded with the Recorder of Deeds. While the Note had been assigned several times prior to the bankruptcy, no assignment of the Deed of Trust had been recorded prior to that date. Therefore, as of the date of bankruptcy, the records of the Recorder of Deeds still showed that New Century was the grantee under the Deed of Trust and that MERS, as nominee for New Century, was the beneficiary under the Deed of Trust. Nevertheless, the court concluded that assuming that the note-holder is a member of MERS, thereby creating an agency relationship, the fact that MERS is identified as the beneficiary under a deed of trust for the benefit of the note-holder does not create a split between the note and deed of trust.
April 9, 2013 | Permalink | No Comments
Massachusetts Appellate Court Upholds MERS’ Authority to Assign Mortgage
In Bassilla v. GMAC Mortgage, et al., No. 09-J-519 (Mass. App. Ct. Dec. 4, 2009), Court upheld MERS’ authority to assign the mortgage as the mortgagee. Such authority to assign its mortgage interest was held to exist despite the fact that MERS did not own or hold the underlying promissory note. This Court specifically held that MERS, “the lender’s nominee and record title holder had the ability to make a valid assignment.”
April 9, 2013 | Permalink | No Comments
No News to Report on Preemption
The Fourth Circuit recently reversed a dismissal of a fraud claim in McCauley v. Home Loan Investment Bank, F.S.B.; Deutsche Bank National Trust Company. The main issue on appeal was whether the Home Owners’ Loan Act preempted the homeowner’s state law claims arising from a mortgage originated by a federal savings association. While the court affirmed the dismissal of the unconscionability claim as preempted by HOLA, it held that the fraud claim “only incidentally affects lending, it is not preempted by HOLA or its implementing regulation . . ..” (12-13)
As to the unconscionability claim, the court found that McCauley “in essence asks us to impose new, substantive requirements on mortgage lenders.” (10) But as to the fraud claim, the court found that HOLA and its implementing regulation were not intended to “preempt state laws that establish the basic norms that undergird commercial transactions.” (7, citation omitted) McCauley does not blaze a new path on preemption, but it is consistent with a number of recent decisions that refuse to broadly preempt state consumer protection laws, a welcome trend.
April 9, 2013 | Permalink | No Comments
April 8, 2013
Rule of Law Cuts Both Ways
The New York Appellate Division (2d Dep’t) reversed orders by Justice Schack of New York Supreme Court (Kings County) in HSBC Bank USA, N.A. v. Taher. Justice Schack became something of a folk hero to many for holding lenders’ feet to fire for their lackadaisical approach to various formal requirements for foreclosures. But he has been accused of playing fast and loose with the law himself. Just as many have rightly said that lenders should be made to comply with the law governing foreclosures, those opposing lenders must do the same. The Appellate Division wrote
Since Emmanuel was decided approximately two months before the Supreme Court improperly directed dismissal of the complaint in the instant action, sua sponte, for lack of standing, we take this opportunity to remind the Justice of his obligation to remain abreast of and be guided by binding precedent. We also caution the Justice that his independent internet investigation of the plaintiff’s standing that included newspaper articles and other materials that fall short of what maybe judicially noticed, and which was conducted without providing notice or an opportunity to be heard by any party (citation omitted) was improper and should not be repeated. (4)
There can be the rule of law without justice, but there can be no justice without the rule of law.
April 8, 2013 | Permalink | No Comments
April 7, 2013
Michigan District Court Dismisses Homeowner’s Action to Declare Foreclosure Null and Void
In Olesuk v Fed. Natl. Mort. Assoc., 2:12-cv-11001 (Dist. Ct. Mich. 2012), the court dismissed an action by homeowners against the parties involved in the multiple assignments of their mortgage, including MERS (Defendants). Homeowners brought the action after defaulting on their mortgage, seeking a declaration that the foreclosure action brought by the mortgagee be declared null and void. The homeowners brought the following claims: “(1) Quiet Title; (2) Fraud in the Assignment against JPMorgan and Chase Home (related to the 2009 assignment); (3) Fraud in the Assignment against Chase Home and MERS (related to the 2010 assignment); (4) Fraud in the Signatures (Robosigning); (5) that Defendants are not the real parties in interest and lack standing to foreclose, and; (6) Slander of Title.”
Homeowners’ claims rested on two facts. First, they claimed that the notarized certifications of the 2009 and 2010 assignments were false and therefore the assignments were invalid. Second, homeowners claimed that Fannie Mae executed an unrecorded assignment of the note to a REMIC, that the REMIC was not a party to the subsequent transfers of the mortgage, and thus the assignments were invalid.
The court rejected all of homeowners’ claims. The first and fifth claims were based on an argument “that Defendants may not foreclose on the property because the allegedly fraudulent or forged signatures and the transfer to the REMIC trust rendered the assignments invalid.” The court rejected this argument because “as non-parties to the assignments, [homeowners] lack standing to challenge their validity.”
The court rejected the second, third, and fourth claims because homeowners could not “establish that they relied to their detriment upon the allegedly forged signatures or fraudulent assignments.” The court then rejected the sixth claim because “the assignments, fraudulent or not, do not disparage Plaintiffs’ claim of title.”
April 7, 2013 | Permalink | No Comments
District Court for the Northern District of Illinois Finds No Wrongdoing in MERS’s Assignment & Deutsche Bank’s Ensuing Foreclosure
In Long v. One West Bank, No. 11 C 703 (N.D. Ill. 2011), the District Court for the Northern District of Illinois denied OneWest Bank, MERS & Deutsche Bank’s motion to dismiss in part as moot, and granted the motion in part. Additionally, the court denied defendant Albertelli’s motion to dismiss as moot.
Plaintiff Tammy Jo Long entered into a residential mortgage loan with Taylor, Bean, & Whitaker (TBW) in 2005 for property located in Georgia. Plaintiff Castle Home Builder’s, Inc. allegedly invested in improving the property and maintained a claim against the property. After numerous requests to identify the current lawful owner and holder of the Note and Security Deed, Ms. Long stopped making payments. While Deutsche represented that it was the owner in a non-judicial foreclosure proceeding, plaintiffs contended that TBW’s bankruptcy had precluded any transfer of interest in the Note to Deutsche. Plaintiffs also contended that Deutsche used a fabricated copy of the Note and Assignment to support their foreclosure action.
Plaintiffs’ amended complaint alleged six separate counts:
- Violations of the Fair Dept Collection Practices Act (FDCPA)
- Violation of the Illinois Uniform Deceptive Trade Practices Act
- Violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (Fraud Act)
- Violations of the Fair Credit Reporting Act
- Wrongful foreclosure
- Quiet title claim
Plaintiffs consented to voluntarily dismiss all claims against defendant Albertelli. Plaintiffs also consented to dismissing counts 2, 4, and 6 against OneWest Bank, MERS and Deutsche Bank without prejudice.
The court discussed TBW’s bankruptcy, and the validity of the copy of the Note and Assignment of Deed. First, the court concluded TBW’s bankruptcy was irrelevant to the assignment since MERS was the grantee under the Security Deed. Second, the court rejected the claim that a copy of the note was insufficient, stating “[t]here is no requirement…that an original promissory note be produced in order to execute a valid assignment, and Plaintiffs have failed to point to any law providing such a requirement.” Third, the court rejected claims that the assignment violated the Pooling and Servicing Agreement (PSA), concluding plaintiffs lacked standing to assert the claims as they were not parties to the PSA nor had they cited any precedent holding that an assignment is invalid because it conflicts with the PSA.
Wrongful foreclosure
The court concluded that plaintiffs had not “alleged any facts that would plausibility [sic] suggest that Defendants engaged in a wrongful foreclosure action or that Plaintiffs were damaged by any unlawful conduct by Defendants relating to the foreclosure.” Therefore, they granted defendant’s motion to dismiss the wrongful foreclosure claim.
FDCPA Claims
The court concluded that the FDCPA was inapplicable in this case because the debt related to commercial debt rather than consumer debt. Additionally, the court noted plaintiffs “failed to point to precedent indicating that a non-judicial foreclosure is considered debt collection activity protected by the FDCPA.” Therefore, they granted defendant’s motion to dismiss the FDCPA claims.
Fraud Act
The court also rejected plaintiffs’ fraud claims, concluding that “Deutsche was assigned the power of sale and there [were] no allegations that plausibly suggest that the foreclosure sale was unlawful.” Accordingly, the court concluded plaintiffs failed to meet FRCP Rule 9(b) particularity requirements.
April 7, 2013 | Permalink | No Comments
