Editor: David Reiss
Brooklyn Law School

February 19, 2013

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

By Justin Rothman

In Burnett v. Mortgage Electronic Registration Systems, Inc., No. 1:09 CV 00069 DAK, 2009 WL 3582294 (D. Utah Oct. 27, 2009), the United States District Court of Utah held that Mortgage Electronic Registration Systems, Inc (“MERS”) had authority to initiate non-judicial foreclosure on property of the plaintiff and to appoint a successor trustee. In this case Plaintiff received a loan in order to purchase a home. In conjunction with the loan, Plaintiff signed a trust deed, which identified MERS as “beneficiary.” The trust deed also gave MERS 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.” Plaintiff defaulted under the trust deed, and thereafter, MERS appointed Woodall as Successor Trustee. MERS initiated foreclosure on Plaintiff’s property and Woodall carried out the foreclosure.


The plaintiff brought forth six separate claims against Defendants including: (1) violations of the Fair Debt Collection Practices Act, (2) violations of the Utah Consumer Sales Practices Act, (3) breach of duty, (4) a request for declaratory judgment, (5) violations under § 57-1-31 of the Utah Code and (6) slander of title. The court stated that the “driving argument underlying all of Plaintiff’s claims is that MERS lacked authority to initiate the foreclosure of the Property or to appoint Woodall Successor Trustee. Plaintiff argues that because MERS was without authority to appoint Woodall Successor Trustee that Woodall also lacked authority.”


However, the court found that “the Deed of Trust expressly gives MERS both the authority to foreclose and the authority to appoint a successor trustee.” The court went on to say that upon Plaintiff’s default in payments, “MERS had authority to ‘take any action’ required of Lender, including the right to appoint Woodall trustee and the right to foreclose and sell the property.” Thus, the court dismissed Plaintiff’s complaint.

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