Editor: David Reiss
Brooklyn Law School

February 21, 2013

Rhode Island Superior Court Addresses Issues Payette Did Not

By Karl Dowden

In Kriegel v. Mortgage Electronic Registration Systems, PC2010-7099 (R.I. Sup. October 13, 2011), the court granted the defendant’s motion to dismiss the plaintiff’s claim. The plaintiff sought a declaratory judgment and petition to quiet title for his property. The plaintiff argued that the language in the mortgage barred the foreclosing party from having the right to execute the statutory power of sale.

The court relied on the holding in Payette v. Mortgage Electronic Registration Systems in finding that as a matter of law “foreclosure sales conducted by MERS or by one of MERS’ assignees [are] valid.” The court then went on to address the issues that Payette‘s holding did not cover.

The plaintiff alleged that he was misled into believing the original Lender was his mortgagee. However, the court found that “even if true … the clear and unambiguous language in the Mortgage instrument signed by Plaintiff [ ] designated MERS as the mortgagee and nominee to the lender numerous times.”

The court also relied on precedent to dismiss the plaintiff’s claim that designating MERS as the mortgagee disconnects the note and Mortgage, resulting in both becoming void.

The court next addressed a challenge of MERS’ assignment of the mortgage to FNMA, the foreclosing party. The court found that Payette held that “the homeowner lacked standing to challenge the propriety of MERS’ assignment of a mortgage.” In this case, the court acknowledged that Payette was decided on a summary judgment, while this case is a motion to dismiss. However, the court held that “because standing does not raise a question going to the merits of the controversy, it is also appropriately raised on a motion to dismiss.” Since the plaintiff was not a party to the assignment between MERS and FNMA nor did the assignment cause an injury in fact to the Plaintiff, the court dismissed this challenge as well.

Finally, the plaintiff challenged the ability of GreenTree, the servicer for FNMA, to foreclose. The plaintiff argued that GreenTree was not a “Lender” under either the Mortgage agreement or in the relevant statutory authority. However, the court found that the language of the Mortgage agreement states “the mortgagee or its assigns may invoke the Statutory Power of sale.” In addition, the court rejected the plaintiff’s narrow interpretation of the statute and found that GreenTree could properly foreclose the property.

The court ultimately granted the defendant’s motion to dismiss the plaintiff’s claims.

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