Editor: David Reiss
Brooklyn Law School

June 4, 2013

Rhode Island Superior Court: Homeowners Lack Standing to Challenge MERS Assignment

By Devon Avallone

In Scarcello v. Mortgage Electronic Registration Systems, Inc., et al, C.A. No. KC 2011-0548 (R.I. Super. June 26, 2012), the court granted defendant MERS’s motion to dismiss plaintiffs’ complaint challenging assignee Aurora’s standing to foreclose and seeking an order to quiet title on the property. Plaintiff homeowners executed a note and mortgage for the property to MERS as nominee for Homecomings Financial Network, Inc., which were later assigned by MERS to Aurora Loan Services, Inc. After plaintiffs defaulted, Aurora foreclosed and subsequently sold the property. Plaintiff homeowners alleged that Aurora, as assignee, lacked standing to foreclose and sell the property. The court found the facts of Scarcello similar to those in Kriegel v. Mortgage Electronic Registration Systems, No. PC 2010-7099, 2011 WL 4947398 (R.I. Super. Oct. 13, 2011) stating “it is well established that ‘homeowners lack standing to challenge the propriety of mortgage assignments and the effect those assignments, if any, could have on the underlying obligation.'” Since plaintiff homeowners are not a party to the assignment, they lack standing to challenge the assignment’s validity. Plaintiffs further alleged that the assignment was unenforceable without a power of attorney for the signing party, but the court held that this was not required as MERS’s power to assign the mortgage stems from its designation as mortgagee and nominee of Homecomings, as clearly stated in the mortgage instrument. Plaintiffs failed to state a plausible claim for relief, and as such, the court dismissed plaintiffs’ complaint.

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