Tag Archives: lawful assignment

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.

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.

Oregon Court Rejects Plaintiff’s Argument That the Trust Deed Can Only be Foreclosed if a Single Entity Holds Both the Note and Deed

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After receiving a Notice of Default and Election to Sell, the plaintiff in Spencer v. Guaranty Bank et al., No. 10CV0515ST, Deschutes Co. Circuit (May 5, 2011) sought an injunction barring MERS, as well as the other defendants, from bringing a foreclosure action. The court granted the defendants’ Motion to Dismiss with prejudice.

In addition to the court granting the motion to dismiss, the court also noted that the plaintiff “made no claim that she was not in default nor that any requirement of ORS 86.735 were not satisfied,” the court held that MERS satisfied the statutory definition of “beneficiary” under ORS 86.705. Specifically, the court identified that it was “not persuaded that Mortgage Electronic Registration Systems couldn’t act in that capacity, even if it is not the holder of the note.”

Moreover, the court also rejected the plaintiff’s argument that the trust deed can only be foreclosed if a single person or entity holds both the note and deed, noting that ORS 86.770(2) protects the plaintiff from a lawsuit seeking enforcement of the note after the non-judicial sale. “The bottom line is that plaintiff sought to retain ownership, apparently forever, of a property for which she has not paid nor even alleges that she intends to pay for. She has not stated a claim.”

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.

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.