December 6, 2012
Massachusetts Supreme Judicial Court Holds that without a Recordable Assignments, MERS has no Standing
In US Bank National Ass’n v. Ibanez , 2009 WL 3297551, (MA S. Judicial Ct, 2011), the court held that a party lacks standing to foreclose when it holds a mortgage note endorsed in blank and an assignment of the mortgage endorsed in blank, but not a recordable assignment. The case involved three separate foreclosure sales in Springfield, Massachusetts. Massachusetts law provides for non-judicial foreclosure by advertisement. In all three foreclosure actions, the foreclosing party advertised the foreclosure sale in the Boston Globe rather than a local Springfield paper. All three plaintiffs brought actions in Land Court to “remove a cloud from the title” of the properties.
December 6, 2012 | Permalink | No Comments
New York Supreme Court Holds that County Clerks Have a Statutory Duty to Record and Index Mortgages
In Merscorp, Inc. v. Romaine, 861 N.E.2d 8 (NY S. Ct., 2002), court had to decide whether the Suffolk County Clerk was compelled to record and index mortgages, assignments of mortgage and discharges of mortgage, which name MERS as the lender’s nominee or mortgagee of record. The court held that the clerk does have a statutory duty to record and index instruments affecting real property.
December 6, 2012 | Permalink | No Comments
Kansas Supreme Court Holds that Non-lenders Like MERS Lack Standing to Intervene in Foreclosure Actions
In Landmark Nat’l Bank v. Kesler , 216 P. 3d 158 (KS S. Ct., 2009) MERS appealed a lower court decision that held that a non-lender like MERS is not a contingently necessary party in a mortgage foreclosure action. On appeal the court held that MERS does not have standing to intervene as a necessary party in a foreclosure action initiated by a junior lien holder, because MERS was not the owner of the note or mortgage.
December 6, 2012 | Permalink | No Comments
Minnesota Supreme Court Holds that MERS is not Requred to Record Assignment of Mortgage in Order to Commence Foreclosure
In Jackson v. MERS, 770 N.W.2d 487 (MN S. Ct., 2009), mortgagors brought actions against MERS to enjoin the non-judicial mortgage foreclosure sales on grounds that MERS failed to comply with Minnesota’s statutory requirement to record all assignments of the mortgage and to give notice of each assignee of the mortgage. The court held that MERS was not required to record the assignment of the underlying indebtedness in order to commence foreclosure under Minnesota Statute §§580.02 and 580.04.
December 6, 2012 | Permalink | No Comments
Florida Third District Court of Appeals Holds that MERS has Standing to Foreclose because no Rights are Affected
In MERS, Inc. v. Revoredo, 955 So.2d 33 (FL 2d DCA, 2007), MERS brought a foreclosure action against plaintiffs, based on a note of which it was the holder. MERS did not “own” the note even though it was called the “mortgagee” on the mortgage note. The Florida trial court dismissed the action for lack of standing. On appeal, the Florida appellate court held that MERS has standing to foreclose in Florida because “no substantive rights, obligations or defenses are affected by the use of the MERS device.” The court also did not find any distinction between being the “holder” or “owner” of a note.
December 6, 2012 | Permalink | No Comments
December 5, 2012
Washington State Supreme Court Holds that MERS is Not a Lawful Beneficiary Under Washington’s Deed of Trust Act and Homeowners May Have a Cause of Action Against MERS Under Washington’s Consumer Protection Act
Sitting en banc, the Washington Supreme Court in Bain v. Metropolitan Mortgage Group, Inc., 285 P.3d 34 (Wash. 2012) answered two of three certified questions from the Federal District Court for the Western District of Washington in favor of two homeowners. In this case, the homeowners’ deeds of trust named MERS as the beneficiary and nominee for the lender, and named the title company as the trustee. The homeowners eventually fell behind in the payments, and MERS, acting as beneficiary of the deeds of trust, named successor trustees who commenced foreclosure proceedings. The assignments of the promissory notes were not recorded. The homeowners sought injunctions to stop the foreclosures, and the cases are pending in federal court. The district court hearing the case certified three questions of state law to the state supreme court.
The first question was “whether MERS is a lawful beneficiary with the power to appoint trustees within the deed of trust act if it does not hold the promissory notes secured by the deeds of trust.” The court held that “only the actual holder of the promissory note or other instrument evidencing the obligation may be a beneficiary with the power to appoint a trustee to proceed with a nonjudicial foreclosure on real property. Simply put, if MERS does not hold the note, it is not a lawful beneficiary.”
The second certified question was “what is the legal effect of Mortgage Electronic Registration Systems, Inc., acting as an unlawful beneficiary under the terms of Washington’s Deed of Trust Act?” The court declined to answer this question based on the record and briefing before them.
The third certified question was “does a homeowner possess a cause of action under Washington’s Consumer Protection Act against Mortgage Electronic Registration Systems, Inc., if MERS acts as an unlawful beneficiary under the terms of Washington’s Deed of Trust Act?” The held that “if the first word in the third question was ‘may’ instead of ‘does,’ our answer would be ‘yes.’ Instead, we answer the question with a qualified ‘yes,’ depending on whether the homeowner can produce evidence on each element required to prove a CPA claim.” The elements of a CPA claim are “(1) unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; (5) causation.” (internal quotations omitted).
December 5, 2012 | Permalink | No Comments
Borden & Reiss: “Once a Failed REMIC, Never a REMIC”
This article analyses how courts may reach results that undercut arguments that REMICs were the owners of the mortgage notes and mortgages for tax purposes. And even if the majority of states rule in favor of REMICs, the few that do not can destroy the REMIC classification of many mortgage-back securities that were structured to be—and promoted to investors as—REMICs. This is because rating agencies require that REMICs be geographically diversified in order to spread the risk of defaults caused by local economic conditions, REMICs hold notes and mortgages from multiple jurisdictions. Most, if not all, REMICs own mortgages notes and mortgages from states governed by laws that the courts determine do not support REMIC eligibility for the mortgages from those jurisdictions. This diversification requirement makes it very likely that REMICs will have more than a de minimis amount of mortgages notes that do not come within the definition of qualified mortgage under the REMIC regulations. Professionals who helped structure these securitizations may face liability if the IRS were to find that a purported REMIC was just purported and not a REMIC.
December 5, 2012 | Permalink | No Comments
