July 10, 2013
In Cuevas v. The Bank of New York Mellon PC 2010-0553 (R.I. Sup. April 18, 2012), the court found in favor of Bank of New York Mellon in Cuevas’s action to quiet title and for lack of jurisdiction dismissed an appeal from the Sixth Division District Court ordering ejectment of the Cuevas.
In 2005, Cuevas secured a loan with First NLC Financial Services LLC and contemporaneously executed a Mortgage designating MERS as “nominee for Lender and Lender’s successors and assigns . . . borrower understands and agrees . . . MERS has . . . the right to foreclose and sell the property.” Two years later, MERS assigned the mortgage interest to Bank of New York Mellon. After Cuevas was made aware of a default in her mortgage and failed to make the necessary payments, the property entered foreclosure proceedings and Bank of New York purchased the property.
The court only addressed the substance of the quiet title claim. In accordance with established Rhode Island law (See Payette, Kriegel, and Porter blogged here), the court found the foreclosure proper. When the language of the mortgage clearly designates MERS as mortgagee and authorizes MERS to act as the lender’s nominee and enforce the note obligations, MERS is a valid holder of the mortgage with the power to foreclose and assign.
The court also held that the assignment of the mortgage to New York Mellon was proper because the assignment of a mortgage from MERS “does not fatally disconnect the note and mortgage debt.” Rhode Island law is clear that the holder of the note at the time of foreclosure proceedings is irrelevant because the mortgagee acts as the nominee for the current note holder. As a result of the assignment of the mortgage by MERS, Bank of New York Mellon held the Statutory Power of Sale because MERS’s entire interest in the mortgage was assigned.
Furthermore, the court found that as a “stranger” to the transaction, Cuevas had no standing to challenge the assignment. The court granted Bank of New York Mellon’s motion to dismiss and remanded to the District Court for a judgment upholding the foreclosure and assignment.