Tag Archives: banks

Court Holds That MERS Assignment, in Isolation, Could Not Prove Ownership

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The court deciding In Re Wilhelm (Case No. 06-51747) was faced with the issue of when actual notes prove that the note’s chain of ownership is unclear. In reaching their decision the court found that in such a situation, the MERS assignment could not, on its own, prove ownership of the note.

The court in this case stated that the MERS assignment was legitimate when taken as a whole, along with proper transfer of the note. The court further went on to note “in hundreds of stay relief motions, including many post-Sheridan, creditors are providing adequate documentation and explanation to meet the requisite standing requirements.”

Michigan District Court Holds That MERS Cannot Foreclose by Advertisement But Can Assign its Security Interest

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In Knox v. Trott & Trott, No. 10-13175, Dist. Court, (Michigan 2011) the court denied the plaintiff’s motion for reconsideration under Rule 60(b)(3) and (4). Knox maintained that the court erred in rejecting his argument that the defendants lacked standing under Mich. Comp. Laws 600.3204(1)(d) to foreclose on his property.

Plaintiff based his request on a previous Michigan court of appeals case, Info-Hold, Inc. v. Sound Merchandising, Inc. 538 F.3d 448, 455 (6th Circ. 2008). However, the court distinguished that case from the present case, as the former dealt with the narrow issue of whether MERS could foreclose by advertisement or whether it must use judicial foreclosure. In the present case, the court stressed that absent a showing by MERS that it owned “an interest in the indebtedness secured by the mortgage,” it lacked authority under the Michigan statute to foreclose.

In the present case, however the court found that MERS was not the foreclosing entity. As such, its status as defendant in the litigation fell outside the parameters of the issue resolved in Residential Funding.

MERS Has Standing to Bring Foreclosure Action as Court Ruled There Was No Question That the Defendant-Homeowner Was the Correctly Named Party

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In the case of Mortgage Elec. Registration Sys., Inc. v. Ventura, No. CV 054003168S, 2006 WL 1230265 (Conn. Super. Ct. April 20, 2006) the plaintiff-lender moved for summary judgment against defendants, a husband and wife, as to liability only. After review of the lender’s complaint and allegation that the husband was indebted to the lender, the court found that because the husband and quit claimed his interest in the property to the wife, she was the owner of the equity of redemption. Consequently, the wife was properly named as a party to the litigation as a defendant.

Moreover, there was no question that the named lender was the correct party to bring the action. Consequently, the lender was entitled to summary judgment as to the husband’s and the wife’s liability only.

The defendants first claimed there was a question of fact as to whether the defendant Tina Galka-Ventura was liable to MERS. However, the court determined this was not a question of fact as the plaintiff properly alleged that the defendant Joseph Ventura quitclaimed his interest to Gina. Thus, the court determined she was the owner of the equity of redemption.

Second, the defendants claimed that there was a genuine issue of material fact as whether a debt was owed to the plaintiff. The court determined that this was not a material fact. Thirdly, the defendants claimed there was material fact as to what entity is the holder of the note securing the property. The court also determined that this was not a material question.

Shadowed by the Shadow Inventory

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My former colleague at Seton Hall, Linda Fisher, has posted Shadowed by the Shadow Inventory:  A Newark, New Jersey Case Study of Stalled Foreclosures & Their Consequences on SSRN. The paper presents the findings of a small, but interesting empirical study.  The study “tests the extent to which bank stalling has contributed to foreclosure delays and property vacancies in” one neighborhood in  Newark, New Jersey. (6) Fisher states that this “is the first study to trace the disposition of each property in the sample through both public and private sources, allowing highly accurate conclusions to be drawn.” (6)

Fisher reaches “a similar conclusion to the previous studies with respect to stalling: without legal excuse or ongoing workout efforts, banks frequently cease prosecuting foreclosures.” (7) Fisher also finds that the stalled foreclosures in her study “do not strongly correlate with property vacancies.”(7)  Fisher claims that her findings “are generalizable to similar urban areas in judicial foreclosure states,” but I would like to have seen more support for that claim in the paper. (45)

As a side note, I found her description of foreclosure in New Jersey interesting:

The New Jersey foreclosure system provides a representative example of a judicial foreclosure regime, albeit one with heightened procedural protections for borrowers enacted into the state’s Fair Foreclosure Act. For instance, lenders must file a notice of intention to foreclose containing information about, inter  alia, the lender, servicer and amount required to cure, before filing a foreclosure complaint in court. Once borrowers are served with process, they may file a contesting answer and litigate the matter, as with any civil case. Because ninety-­‐four percent of New Jersey foreclosures in a typical year are not contested, the process is largely administrative and handled through a statewide Office of Foreclosure. Court personnel scrutinize bank evidence in support of default judgments. Borrowers may file late answers, and are responsible only for curing arrears and paying foreclosure fees up until the time of judgment. (14-15, emphasis added, citations omitted)

Because this blog has as one of its main focuses downstream litigation judicial opinions, it is important to remember how few cases actually reach a court room, let alone result in a written opinion by a judge.

 

Washington Court Holds That the Language of the Security Instrument Gave MERS Both the Authority to Foreclose and Assign the Deed of Trust

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The court Salmon v. Bank of America, MERS et al., No. 10-446 (D. Wash. May 25, 2011) dismissed claims against Bank of America and MERS. The plaintiffs argued that MERS was a “ghost-beneficiary” and as such could not be the beneficiary of a deed of trust under Washington law, as it did not have an interest in the note. The court rejected this argument, and noted that the beneficiary of a deed of trust is not required to be the note holder

The court, in their holding, noted that MERS had both the authority to foreclose and the authority to assign the deed of trust, based on the language of the security instrument.

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 Court Holds MERS Foreclosure Valid, Although Signatories on the Assignment Were Officers of More Than One Entity

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The court in deciding Ostigaard v. Deutsche Bank National Trust Company et al., No. 0:10cv1557, (May 2, 2011) granted MERS as well as its codefendants’ motion to dismiss the complaint with prejudice. The court heavily relied on the holding from an earlier case [Jackson v. MERS].

The plaintiff made the allegation that the foreclosure was invalid, claiming that the signatories on the assignment were officers of more than one entity. The court, in rejecting the plaintiff’s notion, found that “In [Jackson v. MERS], the Minnesota Supreme Court reviewed the operation of MERS and noted ‘legislative approval of MERS practices’ by the Minnesota Legislature. The Jackson court also recognized that MERS shares officers with some of the lenders with which it works. Consequently, the plaintiff’s argument failed.” Likewise, the court also rejected the plaintiff’s contention that his inability to contact the MERS signing officer who executed the assignment was a denial of due process.