Editor: David Reiss
Brooklyn Law School

March 16, 2013

Utah District Court Holds that MERS Has Authority to Assign Beneficial Interest and that Assignee Has Power to Initiate Non-Judicial Foreclosure

By Justin Rothman

In King v. American Mortgage Network, No. 1:09 CV 125 TS, 2010 WL 3222419 (D. Utah Aug. 16, 2010), the United States District Court of Utah granted Defendant’s motion to dismiss Plaintiff’s claims. In November 2007, Plaintiff received a loan for $112,000 from American Mortgage Network, Inc. (“AmNet”) to purchase property in Ogden, Utah. In connection with the loan, the plaintiff signed a promissory note. Plaintiff’s loan with AmNet was secured by a deed of trust. MERS was designated as the beneficiary of the deed of trust and nominee for AmNet and its assigns. The deed of trust stated that MERS had the right “to exercise any or all of Lender’s interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and cancelling this Security Instrument.” In February 2008, AmNet sold the loan to Fannie Mae. On July 7, 2009, MERS assigned its beneficial interest under the deed of trust to Chase. Plaintiff defaulted under terms of the loan, and Chase caused the property to be foreclosed.

The plaintiff first alleged that Defendant Chase violated the Real Estate Settlement and Procedures Act (“RESPA”) by failing to respond to a qualified written request, namely letters sent from Plaintiff’s former counsel. The court, however, held that it did not have to determine the validity of the RESPA claim because the plaintiff did not allege any actual damages resulting from the failure to respond or delay in responding to the qualified written request, which is a requirement of RESPA.

Plaintiff also brought forth a quiet title claim “based on the allegation that the Note and Trust Deed have been split.” The court rejected this claim as well due to the fact that the plaintiff provided no evidence showing that the note and deed of trust were split.

Finally, the plaintiff argued that Chase “did not have the authority to foreclose the Trust Deed on the Property.” The court rejected this claim and found that MERS had “authority to initiate foreclosure proceedings, appoint a trustee, and foreclose and sell the property.” In the case at hand, MERS assigned its beneficial interest under the deed of trust to Chase. Thus, Chase had authority to foreclose.

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