Tag Archives: Downstream Litigation

Ohio Court Dismisses Claims Asserting that MERS Could Not Act as Nominee

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The court in deciding Cline v. Mortg. Elec. Registration Sys., 2013-Ohio-5706 (Ohio Ct. App., Franklin County 2013) overruled appellant’s seven assignments of error, thus this court upheld the judgment of the lower court.

The lower court granted MERS’ motion after concluding that, because appellant voluntarily signed the mortgage and agreed to the existing lien, the mortgage could not constitute a cloud on appellant’s title subject to R.C. 5303.01. On appeal, appellant argued the original loan was originated by CBSK, a company no longer in business; therefore, any agreement between CBSK and MERS that MERS would act as nominee for CBSK is void.

In appellant’s view, because the agreement between CBSK and MERS was void, the note and mortgage were no longer in effect and constituted a cloud upon her title. Appellant argued that, unlike Unger, which concerned mortgage assignments, this matter was different as it concerns the underlying mortgage itself.

Upon review, this court found that the appellant’s complaint failed to state a claim upon which relief can be granted, and, thus, the trial court did not err in dismissing appellant’s complaint pursuant to Civ.R. 12(B)(6). Accordingly, all of the appellant’s claims were overruled.

Washington Court Upholds Dismissal of RESPA Claims

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The court in deciding Bhatti v. Guild Mortg. Co., 2013 U.S. App. 25659 (9th Cir. Wash. 2013) ultimately upheld the lower court’s decision by dismissing the plaintiff’s RESPA claims.

Plaintiffs Nusrat Bhatti and Erfan Semuel filed a complaint in Washington state court against Guild Mortgage Co. and MERS for quiet title, declaratory judgment, and violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601.

Defendants filed a Fed. R. Civ. P. 12(b)(6) motion to dismiss. The lower court granted defendants’ motion to dismiss. Plaintiffs appealed, after considering the plaintiff’s appeal, this court affirmed the lower court.

This court held that the lower court did not abuse its discretion in ruling on defendants’ 12(b)(6) motion. This court also found that defendants did not violate the DTA’s requirement that a deed of trust’s beneficiary hold the note when it appoints a successor trustee

Accordingly, the lower court’s judgment was affirmed.

 

Illinois Court Finds that Assignment was Proper, Thus Wells Fargo Could Foreclose

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The court in deciding Wells Fargo Bank, N.A. v. Abatangelo, 2013 IL App (1st) 130423-U (Ill. App. Ct. 1st Dist. 2013) affirmed the lower court’s ruling in favor of plaintiff Wells Fargo. The court determined Wells Fargo had standing to bring the foreclosure action.

Mr. Abatangelo challenged the lower court’s grant of summary judgment on Wells Fargo’s foreclosure complaint, specifically its finding that Wells Fargo had standing to foreclose on the mortgage. On this appeal, Mr. Abatangelo contended that the lower court erred in granting summary judgment because (1) the mortgage contract did not properly assign the right to foreclose to Wells Fargo; and (2) the trial court improperly considered new arguments raised by Wells Fargo for the first time in a reply brief in support of their motion to dismiss.

After considering the arguments put forward by Abatangelo the court affirmed the lower court decision.

The Court found That Bank of America had Standing Even After Merger

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The court in deciding Bank of Am., N.A. v. Harris, 2013-Ohio-5749 (Ohio Ct. App., Cuyahoga County 2013) found Bank of America had standing after merger.

Plaintiff moved for summary judgment arguing that Bank of America lacked standing to foreclosure because the bank was “a party solely by virtue of a purported assignment from MERS.” Plaintiff argued that MERS had no authority to assign the mortgage to Bank of America, and thus, Bank of America had no standing to bring the suit.

The court found that the bank had standing to bring a foreclosure action because it was the real party in interest at the time that a foreclosure complaint was filed. The court noted that a party who received an assignment of mortgage from MERS as a nominee had standing to foreclose when the borrower defaulted. The court found that here the bank had possession of the note, therefore, it was the current holder of the note and entitled to enforce it under R.C. 1303.31. Further, the court found that after the merger, the bank stepped into the shoes of the absorbed company and had the ability to enforce, thus no further action was necessary to become a real party in interest.

 

United States District Court Rejects Claim Under the Washington Consumer Protection Act

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The United States District Court for the Western District of Washington in deciding Massey v. BAC Home Loans Servicing LP, 2013 U.S. Dist. 180472 (W.D. Wash. Dec. 23, 2013) granted defendants’ motions for summary judgment.

Plaintiff Cindy T. Massey asserted a claim under the Washington Consumer Protection Act against defendants in connection with non-judicial foreclosure proceedings. Defendants Freddie Mac and MERS, together, brought a separate motion for summary judgment. After considering the plaintiff’s arguments the court granted defendants’ motions for summary judgment.

In regards to her CPA claim the court found that the plaintiff failed to identify any deceptive acts perpetrated by Freddie Mac. For that reason alone the CPA claim against Freddie Mac failed.

Ms. Massey also argued that Bank of America did not possess the authority to initiate non-judicial foreclose proceedings on the property for various reasons, the primary of which was the characterization of MERS as the beneficiary on the deed of trust. Specifically, Ms. Massey argued that the assignment of the deed of trust to Bank of America was void, that the Appointment of Northwest Trustee as successor trustee was void, and that Bank of America did not hold the Note when it initiated foreclosure. After considering this argument the court found that they were without merit.

United States District Court Rejects Show-me-the-Note Theory and SpIit-the-Note Theory Claims

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In deciding McWright v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 180500 (N.D. Tex. Nov. 7, 2013) the United States District Court for the Northern District of Texas rejected the plaintiff’s claims.

In her complaint, plaintiff raised the following causes of action: (1) violation of the federal Fair Debt Collection Practices Act, (2) Negligence, (3) Fraud, (4) Declaratory relief, and (5) Quiet Title. Because many of these claims were premised upon unfounded legal theories, the court first addressed the underlying theories before turning to the merits of each of plaintiff’s claims. In addressing the plaintiff’s claims the court uniformly rejected them.

Plaintiff unsuccessfully contended that defendants were required to show proof that they are the holder of the note prior to foreclosing on the property. However, the court noted that this “show-me-the-note” theory has been regularly rejected and would so be in this case as well.

To the extent plaintiff argued that MERS lacked the authority to transfer the loan, the court found that such an argument similarly fails. Moreover, the court denied the remaining plaintiff’s claims as lacking merit.

Kansas Court of Appeals Upholds Summary Judgment in Favor of Wells Fargo

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The Court of Appeals of Kansas in deciding Wells Fargo Bank, N.A. v. Richards, 2013 Kan. App. LEXIS 1160 (Kan. Ct. App. 2013) ultimately affirmed the lower court’s granting of summary judgment for Wells Fargo.

Plaintiff appealed the lower court’s decision granting summary to Wells Fargo Bank.

In this appeal, plaintiff asserted that (1) Wells Fargo lacked standing to bring the foreclosure action; (2) the lower court erred in holding Wells Fargo’s possession of the promissory note he signed was insufficient to enforce and foreclose the mortgage it secures; (3) Wells Fargo did not experience/suffer a default; (4) there was no contract because the note and mortgage were split; and (5) Richards was not afforded due process.

After examining the record and considering the arguments of the parties, this court held that there was no merit to any of Richards’ arguments. Consequently, this court affirmed the lower court.