Tag Archives: assignment

Utah Court Holds That Under Utah Law, MERS Was Not Required to Identify the Note-Holder in Order to Permit the Trustee to Proceed With Foreclosure

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The plaintiff in Nielsen v. Aegis Wholesale Corporation, MERS et al., No. 10-606 (D. Utah May 4, 2011) argued that MERS divided the deed of trust as well as the promissory note. The court, in reaching their decision and rejecting the plaintiff’s argument, noted that “the court adopted the defendant’s argument that plaintiff had latched onto a failed theory—that a note and trust deed can be ‘split’ and rendered null and void.” The court subsequently dismissed the plaintiff’s claims against MERS with prejudice.

The court further went on to state that, “by law, each successor to the note also received the benefit of the security, and by contract, MERS was appointed as the nominee beneficiary under the First Deed of Trust. Contrary to the plaintiff’s argument, MERS had established its rights with respect to foreclosure on the security and MERS had, at all relevant times been, entitled to act as beneficiary under the First Deed of Trust.”

The court further noted that under Utah law, MERS was not required to identify the note holder in order to permit the trustee to proceed with foreclosure.

Oregon Court Rules That MERS’ Role as Beneficiary is Not Inconsistent With the Purpose of Oregon’s Non-Judicial Foreclosure Statute

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The Oregon court in Nigro v. Northwest Trustee Services and Wells Fargo Bank, No. 11 CV 0135 (May 15, 2011) denied the plaintiff’s motion for a preliminary injunction to stop a non-judicial foreclosure sale.

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The court in reaching their holding found that the plaintiff failed to establish the necessary elements to sustain a request for a preliminary injunction. Most notably, the plaintiff failed to demonstrate the likelihood of success based on the merits.

The plaintiff alleged that the defendants violated the Oregon Deed of Trust Act by failing to record all transfers of the assignment as well as the note. The court, in their ruling, cited Bertrand v. SunTrust Mortgage, Inc., which held that MERS was specifically designated by all parties as the beneficiary and had the authority to assign the deed of trust. Although MERS was not a party to this case, the court in Nigro ruled that MERS’ role as beneficiary is not inconsistent with the purpose of Oregon’s non-judicial foreclosure statute, and that the Act did not require the recording of note transfers.

Minnesota District Court Dismisses Plaintiff’s Fraud Claims and Holds That MERS Had Legal Title and Authority to Foreclose

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The Minnesota District Court in Allen v. Wilford & Geske et al.,No. 70-CV-10-29502 (D. Minn. May 9, 2011), after hearing the plaintiff’s contentions, dismissed his complaint for foreclosure fraud. The court held that MERS had legal title and authority to foreclose.

By granting the defendants’ motion to dismiss, the court found that, “MERS was not required to register every assignment of the loan or to track that history in its foreclosure documents…” and “…it was not a misrepresentation for  MERS to identify itself as the mortgagee in the foreclosure documents and not to identify all past and present lenders.”

California Court Affirms MERS’ Authority to Assign its Interest Under a Deed of Trust

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The court in Hollins v. ReconTrust et al., Civil No. 2:11-cv-00945-PSG –PLA (C.D. Cal. May 6, 2011) affirmed MERS’ authority to assign its interest under a deed of trust and granted MERS’ motion to dismiss. The plaintiffs claimed that the foreclosure proceedings initiated by the U.S. Bank as well as ReconTrust were not valid. Moreover, the plaintiff claimed that MERS lacked the authority to assign the deed of trust.

The court considered the plaintiff’s contentions, but rejected the argument. In rejecting the palintiff’s argument, the court found that “federal and state courts in California have repeatedly rejected similar challenges to MERS in cases where the plaintiff expressly authorized MERS to act as a beneficiary.” Regarding the plaintiffs’ allegation that U.S. Bank was not authorized to foreclose due to lack of “documentation evidencing the proper status of U.S. Bank as a party in interest,” the court found the allegation “negated by a judicially noticeable record of assignment from MERS to U.S. Bank.” Last but not least, the plaintiffs’ failure to tender was fatal to their claims.

Jefferson County Circuit Court Holds That Fannie Mae Had Standing to Bring Ejectment Action

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The circuit court in Fannie Mae v. Steele, Jefferson County Circuit Court No. 09-900069 (May 18, 2011) found in favor of the plaintiff [Fannie Mae], by deciding to deny the defendants’ motion to set aside the judgment for possession. The defendants contended that the judgment in favor of Fannie Mae should be vacated on the grounds it was void due to MERS’ assignment of the mortgage to Everhome Mortgage. Everhome Mortgage was the party who conveyed the property to Fannie Mae through foreclosure deed.

The defendants also argued that Fannie Mae lacked standing to eject the defendants. This claim was premised on the holding from to Crum v. LaSalle Bank, 2009 WL 2986655 (Ala. Civ. App. Sept. 18, 2009). After considering the defendants’ contentions, the court held that the MERS assignment to Everhome was valid because MERS had the ability to assign the mortgage and take other actions as the nominee of the lender and its assigns. Likewise, the court also held that Fannie Mae had standing to bring the ejectment action.

Florida Court Dismisses Class Action Against MERS Over Unpaid Recording Fees

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The court in Fuller v. MERS, No. 11cv-1153 (M.D. Fla., June 27, 2012) was “confronted with an old problem: the difficulty of reconciling new technology with old law, thus raising the centuries old separation of powers controversy.” In deciding this case the court found that the Florida statute, which created the recording system, was a creature of statute, as such the remedy the plaintiff sought was to be granted by the legislature and not the courts.

In reaching its decision, the court found that the statute creating Florida’s public recording system did not provide a private right of action, as such Fuller was barred from bringing common law claims based on the statute. Fuller’s claims included civil conspiracy, a Writ of Quo Warranto, unjust enrichment, as well as fraudulent and negligent misrepresentation. Fuller claimed that these claims were independent of the Florida statute, however, he admitted that the statute was the only source of his authority.

The court found that all of Fuller’s claims failed on their merits. Fuller argued that MERS attempted to usurp his function as the recorder of public instruments and sought a Writ of Quo Warranto. However, MES successfully argued that no law required payment of recording fees when a mortgage is assigned but not recorded.

Fuller failed to establish a conspiracy, as MERS did not commit an unlawful act. The court noted that the recording of mortgages is “at the complete discretion of the party wishing to record the document.” Accordingly, MERS was under no legal obligation to record the assignment or pay the recording fees. Fuller’s unjust enrichment claim was also rejected, as MERS had no duty to record, so Fuller could not establish that he had conferred any benefit on MERS. Lastly, Fuller’s fraudulent and negligent misrepresentation claims were based on the assumption that MERS falsely designated itself as the mortgagee on recorded instruments. The court rejected this assumption.

Assignment Ball and Chain

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An undated Nationwide Title Clearing, Inc. “White Paper” (actually, more of an advertorial), Understanding Current Assignment Verification Practices, is making the rounds of the blogosphere. It opens,

The scrutiny of the completeness of collateral review and valid assignment chains has hit the mortgage industry hard, primarily because the industry went from  a securitization process that didn’t  require assignments to be recorded to a heavily scrutinized process requiring complete chains to be recorded at the county. This has made compliance extremely difficult for many lenders and others, especially because the industry went for so many years without this  level of scrutiny. (1)

I’ll say!

This widespread lack of assignments could have negative consequences under the REMIC Rules. This is particularly a concern if it undercuts claims by purported REMICs that they acquired mortgages within the time required by statute.

I also found this passage intriguing:

just because a loan is supposed to be in MERS doesn’t always mean it is. We’ve found many examples of loans never having been assigned to MERS on land record, as well as loans that have been assigned multiple times out of MERS by prior investors/servicers, I would assume due to a poor review and preparation process . . ..(4-5)

I am not sure how courts would unwind such transactions. But I am sure we will find out . . ..