Tag Archives: Mortgage Electronic Recording System

Arkansas Court Denies MERS’ Motion to Set a Decree of Foreclosure

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The Arkansas court in MERS v. Southwest Homes of Arkansas, 301 S.W.3d 1 (2009) denied MERS’ motion to set a decree of foreclosure, therein affirming the decision from the lower court. As the record beneficiary of the deed of trust, MERS received no foreclosure notice. The court in their finding, applied Arkansas law, and found that the lender was the deed of trust beneficiary not MERS, since MERS did not receive payment of the debt.

MERS alleged that the lower court erred in ordering foreclosure because as the holder of legal title it was a necessary party that was never served. However, In affirming the lower court decision, the court disregarded the written terms of the mortgage contract that selected MERS as the deed of trust beneficiary entitled to notice.

The court went on further to hold that under the recorded deed of trust in this case, James C. East, as trustee under the deed of trust, held legal title. Moreover, as the court reasoned, MERS was at most the mere agent of the lender Pulaski Mortgage Company, Inc., and it held no property interest and was not a necessary party.

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

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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

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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.

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

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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

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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.

U.S. District Court for the District of Arizona Found the Mere Use of MERS Nid Not Constitute Common Law Fraud

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The U.S. District Court for the District of Arizona, in Cervantes v. Countrywide Home Loans, Inc., et al., No. 09-cv-00517 (D.Ariz. 2009), dismissed all state and federal claims brought by all three of the borrowers. The borrowers filed a complaint against MERS as well as a group of other defendants

After considering the borrowers’ arguments, the court found the mere use of MERS did not constitute common law fraud on the borrowers. The court found that the plaintiffs had failed to allege what effect, if any, listing the MERS system as a ‘sham’ beneficiary on the deed of trust had upon their obligations as borrowers.

Subsequently, the United States Court of Appeals for the Ninth Circuit affirmed the trial court’s judgment in favor of MERS. Accordingly, the Court held that a borrower lacked the basis to challenge the standing of an entity such as MERS. Further, the court, however, drew attention to a legal reference that such a borrower still had legal recourse by bringing an action to have the trustee’s sale set aside.

Alabama Court Holds That MERS’ Assignment to Current Servicer of the Mortgage Loan was Valid

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The Alabama court in Mortensen v. MERS et al, S.D. Ala. No. CV10-234-S (2010) after considering both arguments, granted summary judgment to MERS as well as all defendants.

The court found that the borrower, from his own volition, knowingly and willingly gave a mortgage interest in the property to MERS. The court also found that the mortgage in this case expressly stated that MERS was the mortgagee under the security instrument.

Accordingly, the court held that the MERS’ assignment to the current servicer of the mortgage loan was valid and assigned all MERS’ interest in the mortgage to the servicer.