New York Supreme Court Holds that MERS Does Not Have Standing to Foreclose if it Does Not Own Both Note and Mortgage
In LaSalle Bank Nat’l Ass’n v. Lamy, 824 N.Y.S.2d 769 (NY S. Ct., 2006), the court held that MERS did not have standing to foreclose because it did not own the note and mortgage. Court reasoned that “well established case authorities have held that where a mortgage debt is represented by a bond or other instrument, an assignment of the mortgage without a concomitant assignment of the note or bond for which said mortgage was given as security is a nullity.”
December 6, 2012 | Permalink | No Comments
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 6, 2012
Nolan Robinson Argues that MERS Should not be Allowed to Initiate Foreclosure Proceedings in Cardozo Law Review
By Gloria Liu
Abstract:
Few American homeowners know much about the small, Virginia-based company that has revolutionized the mortgage industry over the past fifteen years. Yet, Mortgage Electronic Registration Systems, Inc. (MERS) is the named mortgagee on nearly two-thirds of all newly originated residential mortgages in the United States. Industry leaders – including Freddy Mac, Ginnie Mae, and a host of private lenders – created MERS in the mid-1990s to help facilitate a burgeoning market in mortgage-backed securities.
At the time MERS was created, a robust and lightly regulated secondary market for mortgage-backed securities seemed like a good idea. The recent subprime mortgage crisis, which has impacted millions of American homeowners and played a key role in a global recession, has done much to challenge that presumption. One unfortunate byproduct of the subprime mortgage crisis has been a dramatic increase in the number of American homeowners facing foreclosure. For many of these homeowners, the MERS system may compound their hardships by effectively masking the identity of the owner of their loans. One of the benefits of MERS membership, according to MERS, is the legal right to foreclose on a defaulting homeowner in MERS’s name rather than in the name of the entity who actually owns the mortgage. This can mean that homeowners have no way of ascertaining the identity of the party with whom they can negotiate their loans.
Several state courts have considered challenges to MERS’s right to initiate foreclosure actions in its own name. MERS claims to have the legal authority to initiate foreclosure proceedings throughout the United States, but not every court has agreed. Some jurisdictions have expressly upheld MERS’s right to foreclose, while some have questioned or limited MERS’s foreclosure rights. Still other courts have reserved judgment, expressing frustration and confusion regarding MERS’s role in an increasing number of foreclosure and bankruptcy proceedings, and the ostensible connection between MERS and the subprime mortgage crisis.
MERS is currently a plaintiff in as many as forty percent of pending foreclosure actions in some locales. This Note argues that foreclosure actions brought in MERS’s name, without joining the real party in interest, are unlawful. Furthermore, this Note reveals how granting standing to MERS in foreclosure actions threatens to undermine the protections for homeowners that foreclosure law has traditionally provided, and violates important property law doctrines that ensure the proper functioning of the recording system and minimize clouds on title.
Article can be found here.
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December 6, 2012 | Permalink | No Comments