Tag Archives: MERS

Arizona Court Grants Summary Judgment in Favor of MERS in Show Me the Note Claim

Posted on by

The Arizona court in deciding the case of Sparlin v. BAC Home Loans Servicing, CA-CV-2010-0173 (Ct. Ap. AzDiv. 2, 2011), had to consider arguments based on the theory of ‘show me the note.’ Sparlin had appealed the lower court decision to grant summary judgment to MERS. Upon reconsideration, the court affirmed the lower court decision and granted summary judgment.

In arguing their ‘show me the note’ claim, the borrowers alleged that MERS was required to actually prove that it was in possession of the original promissory note in order to execute a substitution of trustee appointing Recon-Trust as the substitute trustee and executing an assignment to BAC Home Loans Servicing. These were the documents that allowed the trustee to initiate foreclosure.

The court, in affirming the lower court’s dismissal, found that MERS, as the beneficiary on the deed of trust, had the right to enforce the security instrument. Additionally, the court found that under Arizona law, it was not required of MERS to be the note holder.

Arizona Court Affirms a Lower Court Decision That Possession of Note Was Not Needed for a Party to Initiate a Non-Judicial Foreclosure

Posted on by

The Arizona court in Maxa v. Countrywide Loans, Inc., 2010 WL 2836958 (D. Ariz. 2010) affirmed a lower court decision that possession of the note was not needed for a party to initiate a non-judicial foreclosure. The court also affirmed that MERS had the authority under the deed of trust to commence foreclosure.

The court in reaching their decision rejected the plaintiff‘s claim that the defendants lacked the right to enforce the note; therein making the foreclosure was invalid. The court noted that a trustee’s sale was not an action to enforce the note, but rather it was an exercise of the power of sale upon default.

The court explicitly held that Arizona law bestowed power of sale on the trustee upon default or breach of the contract secured by the trust deed without reference to enforcing or producing a note or other negotiable instrument.

The court in reaching their decision also found that the plaintiff not only gave the power of sale to the trustee, but also agreed to empower MERS, as the lender’s nominee, to exercise the right to foreclose. Lastly, the court directly rejected the plaintiff’s claims of fraudulent misrepresentation based upon the notion that MERS was not a valid beneficiary.

Arizona Court Rejects Plaintiff’s Argument That MERS Lacked Authority to Foreclose

Posted on by

The Arizona court in Kane v. Bosco, No. 10-CV-01787-PHX-JAT, 2010 WL 4879177 (D.Ariz. 2010), after considering the plaintiffs contentions that MERS lacked the power to assign mortgages, proceeded to reject those arguments.

In making such a rejection, the court held that MERS could assign mortgages. Contrary to plaintiffs‘ allegations, the court failed to see how the MERS System lacked authority as a nominee of lenders to assign deeds of trust. Further, the court failed to see how MERS, in assigning deeds of trust, committed any form of fraud as the plaintiff alleged.

Arizona Court Dismisses Plaintiff’s Show-Me-The-Note Claim in Its Entirety

Posted on by

The Arizona Court that decided AOM Group LLC et al v. Mortgage IT, Inc. et al., No. CV 09-2639-PHX-SRB (D.Ariz.)(2010) held that the plaintiff’s ‘show me the note’ argument was lacking in merit.

The plaintiff brought an action that challenged the validity of completed trustee sale. The plaintiff made several allegations, one of which was unlawful fraudulent foreclosure by MERS and the servicer. The court after considering the arguments dismissed the plaintiff’s action its entirety.

The United States District Court for the District of Arizona Reasons That the Plaintiff Agreed to Empower MERS to Foreclose

Posted on by

The United States District Court for the District of Arizona, in Silvas v. GMAC Mortgage, LLC, et al., cv00265 (AZ Dist., 2009), reaffirmed MERS’ standing as the beneficiary of a deed of trust.

In the present case, the plaintiff brought a host of claims against the defendant. One such claim included conspiracy to commit fraud by making use of the MERS System. The court considered the plaintiff’s arguments, however the court rejected them. In rejecting the plaintiff‘s contentions, the court found that they were not only inaccurate, but that the claims were also insufficient to support the plaintiff’s assertions.

The court also reasoned that the plaintiff agreed to empower MERS to foreclose. In reaching this conclusion the court noted that the deed of trust designated MERS as the beneficiary, and authorized MERS to take any action to enforce the loan. One such right included the power to foreclose.

The United States District Court for the District of Arizona Finds That the Borrower Gave MERS the Ability to Take Any Action, Which the Lender Would be Able to Take

Posted on by

The United States District Court for the District of Arizona, in Blau v. America’s Servicing Company, et al, No. CV-08-773 (D. Ariz., 2009), acknowledged that MERS, acting as a beneficiary, was the proper party to execute an assignment of the deed of trust.

The borrower gave MERS the ability to take any action, which the lender would be able to take. Thus, this included the ability to assign, foreclose, and even substitute the trustee. The court also found that MERS had no liability under The Truth in Lending Act (TILA) since it had not been involved in making the loan to the plaintiff.

Homeowner Can Challenge Mortgage Assignment

Posted on by

Judge Kennelly has ruled that a homeowner can challenge a mortgage assignment under Illinois law in Elesh v. MERS et al., No. 12 C 10355 (N.D. Ill. Aug. 16, 2013). The Court stated that

Defendants argue that Elesh is not a party to the assignment and thus lacks standing to challenge it. Only one of the cases upon which defendants rely, however, is an Illinois case, and that case makes it clear that this supposed “rule” has exceptions. See Bank of America Nat’l Ass’n v. Bassman FBT, LLC, No. 2-11-0729, 2012 IL App (2d) 110729, 981 N.E.2d 1, 6-11 (2012). The basic requirements of standing are that the plaintiff suffered an injury to a legally cognizable interest and is asserting his own legal rights rather than those of a third party. See id. at 6. Elesh unquestionably meets the first requirement; the recorded assignment constitutes a cloud on his title, and Deutsche Bank recently relied on the assignment to prosecute a foreclosure action against him. Elesh also has a viable argument that in challenging the validity of the assignment, he is asserting his own rights and not someone else’s rights. For example, given Deutsche Bank’s apparent lack of possession of the original note, Elesh is put at risk of multiple liability as long as Deutsche Bank claims to hold the mortgage. See id. at 7-8 (citing cases indicating that an obligor has an interest in ensuring that he will not have to pay the same claim twice). In any event, Illinois law, to the extent there is much of it on this point, appears to recognize an obligor’s right to attack an assignment as void or invalid under certain circumstances. (3)

This is a pretty significant case, at least in Illinois, as it provides homeowners with a way to defend against a foreclosure action that does not rely upon whether the loan is in default or not. The Court takes seriously the possibility that the homeowner could otherwise be liable for the same debt twice.  Commentators and courts have downplayed that risk, so it is notable that this Court has taken this position. Time will tell if other courts do so as well.

 

 

 

 

[HT April Charney]