Tag Archives: Mortgage Electronic Recording System

Alabama Court Rules That Demonstration of Note Ownership is Not Needed

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The court in Farkas v. SunTrust Mortgage, Inc, et al., 447 F. App’x 972 (11th Cir. 2011) found that Alabama is a non-judicial foreclosure state and that the party seeking foreclosure was not required to demonstrate ownership of the promissory note before taking action on the corresponding mortgage. This action involved MERS as the foreclosing mortgagee.

The debtor claimed that Article 3 of the Uniform Commercial Code (UCC) required that the party seeking foreclosure had to prove an interest in the note. However, the court reasoned that the UCC was not relevant to non-judicial foreclosure proceedings.

Hawaiin Court Rejects Plaintiff’s Allegations of Fraud Against MERS and Grants Summary Judgement

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The court in Sakugawa v. MERS et al, D. Hawaii, 1:10-cv-00028 (Feb. 25, 2011) granted summary judgment in favor of MERS. Thus rejecting the plaintiff’s accusations for fraud and claims of state law violations regarding loan origination.

The court also found that MERS was not involved in the loan origination process and was not in contact with the plaintiff regarding the transaction. Thus the court found that there was no basis to find that MERS committed any fraudulent, unfair or deceptive acts regarding the loan consummation.

The Court found that MERS was the correct mortgagee under the security instrument, thus the mortgage permitted MERS to foreclose and sell the property.

Pennsylvania Appellate Court Affirms MERS’ Standing to Foreclose

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The Pennsylvania appellate court in MERS v. Estate of Harriet L. Watson, et al., Superior Court of Pennsylvania # 637 WDA (2006), affirmed the standing of MERS to foreclose.

The case involved counter-claims as well as affirmative defenses filed by the estate of a deceased borrower in response to a foreclosure suit brought by MERS in 2003. The estate’s defenses and counter-claims included the theory that MERS, in someway, lacked standing because it was not the “real party-in-interest.” Moreover, MERS could not bring a foreclosure suit in Pennsylvania since it did not register as a foreign corporation doing business in Pennsylvania.

After consideration of the estate’s claims, the appellate court disregarded the estate’s challenges to MERS standing to foreclose due to the clear language of the mortgage itself. The court then held that MERS was not required to register as a foreign corporation because the act of acquiring, recording, or enforcing a mortgage lien constituted a specific exception under 15 Pa.C.S.A. § 4122 to the general requirement that companies “doing business” in Pennsylvania must obtain a certificate of authority in order to file suit in Pennsylvania. Such actions, by statutory definition, do not constitute “doing business.”

Illinois Federal Appellate Court Rules That MERS Had Sufficient Authority to Commence Foreclosure Proceeding in its Capacity as an Agent

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The federal appellate court in MERS v. Estrella, 390 F.3d 522 [7th Cir. 2004] ruled that MERS had a sufficient authority to commence a foreclosure proceeding, in its capacity as an agent on behalf of its principal.

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At issue in this case was an application to confirm a sale. On appeal, the court dismissed the appeal based upon well-established law that Court orders denying confirmation to judicial sales are not final decisions, and thus are not appealable.

Additionally, implicit in the court’s holding was recognition that MERS has standing to commence a foreclosure proceeding as agent on behalf of its principal. Indeed, the Estrella Court did not dismiss the proceeding in its entirety for lack of standing by the agent, rather cited to Indiana Gas Co. v. Home Insurance Co., 141 F.3d 314, 319 [7th Cir. 1998] which recognized the capacity of an agent to commence a proceeding “[w]hen the principal’s interests are affected by the litigation, the principal’s citizenship counts even if the agent is the sole litigant.”

The federal appellate court did not issue a blanket ban to suits commenced by MERS as an agent on behalf of its principals. Instead, in suits brought by agents, it directs federal district courts to ascertain the citizenship of the principal of the plaintiff to determine whether federal diversity jurisdiction exists.

Georgia Court Authoritatively Recognizes MERS’ Right to Foreclose

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The court in American Equity Mortgage, Inc. and Mortgage Electronic Registration Systems, Inc. v. Chattahoochee National Bank, # 05-cv-1951 (Forsyth Cty. Sup. Ct., Dec. 29. 2005) authoritatively recognized the right of MERS to foreclose. This case involved an action to enjoin an immediate judicial sale due to equitable subrogation in which the court recognized the validity of a lien held by MERS and MERS’ ability to enforce it.

After considering arguments and an evidentiary hearing, the court concluded that “MERS, in its capacity as grantee in the deed to secure debt and as nominee for American, or its successor in interest as the holder of the note, is the entity that would suffer irreparable harm if [Chatahoochee] foreclosed on its judgment lien and is the entity entitled to seek an injunction in this case. MERS is entitled to enforce the American Deed to Secure Debt per its terms.”

The court awarded MERS a permanent injunction precluding Chatahoochee or its successors or assigns from selling or foreclosing on the property as long as the deed held by MERS remained in effect.

Arkansas Court Holds That MERS Had Standing to Seek Relief for its Writ of Assistance

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The court in Mortgage Electronic Registration Systems, Inc. v. Stephanie Gabler, et al., (Circuit Court of Garland County # 2004-17-II) held that “MERS has standing to seek relief for its Writ of Assistance and is the proper party to foreclose the mortgage as MERS is the mortgagee of record and holder of the promissory note.”

The borrowers claimed that MERS did not own the note, thus they did not have standing. However, the court reasoned that ownership of the note was not required to have standing.

The court held that MERS had standing. MERS subsequently obtained a foreclosure judgment, held the foreclosure sale, and obtained a post-judgment order for writ of assistance to remove the occupants, including the named defendant [Gabler.] Shortly after the writ was obtained in June 2004, the pro se borrowers sought removal to federal court, and the Western District of Arkansas rejected jurisdiction. A subsequent emergency appeal to the 8th Circuit Court of Appeals was also denied. The borrowers then filed for bankruptcy, but voluntarily dismissed the bankruptcy action four months later.

The borrowers then went back to state court in the eviction action and filed an objection to the writ of assistance, a request for injunction, and a counterclaim. The borrowers claimed in their objection that they were not properly served in the foreclosure proceedings and that MERS does not have standing because it is not the owner of the note.

The court rejected all of the contentions made by the borrowers and ordered that MERS may execute its writ with the assistance of the county Sheriff.

Oregon Court Stops Foreclosure Pending Clarification in State Court as to MERS Stating Borrower Has “Likelihood of Success Against MERS…”

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The court in Rinegard-Guirma v. Bank of America, et al., Civil Case No. 10-1065-PK, (2010) enjoined the defendants [Bank of America, et al.] from foreclosing on the plaintiff’s [Rinegard-Guirma] property.

The plaintiff, Natache D. Rinegard-Guirma, filed a Motion for a temporary restraining order and preliminary injunction seeking to enjoin a foreclosure sale of her residence. The court granted the plaintiff’s motion for preliminary injunction and continued to enjoin the foreclosure of her property until the claim regarding MERS was resolved by the state court.