Editor: David Reiss
Brooklyn Law School

February 28, 2013

Utah District Court Holds that MERS Has the Authority to Initiate Non-Judicial Foreclosure and to Assign Interest to Another Party

By Justin Rothman

In Schmitt v. Stearns Lending, Inc., No. 2:11 CV 00381 DS, 2011 WL 3861609 (D. Utah Aug. 31, 2011), the United States District Court of Utah held that MERS has the authority to initiate non-judicial foreclosure on a property and to assign its interest to another party. In the case at hand, Plaintiff defaulted under the terms of a deed of trust and note securing the repayment of a loan obtained to purchase a home located in Utah. Non-judicial foreclosure proceedings ensued. The mortgage was previously securitized. Plaintiff argued that the securitization process divested Defendants’ interest in the subject property because the plaintiff’s deed of trust and note were separated during the process. The plaintiff also put forth a more general claim that Defendants lacked authority to foreclose on the subject property.


The court rejected the plaintiff’s claims and found that Defendants’ had interest in the property and had the authority to foreclose on it. The court stated that securitization did not divest Defendants’ interest in the subject property; rather, the court held that “the mortgage follows the note” throughout the securitization process. In addition, the court found that Plaintiff “agreed in the Trust Deed that MERS was the beneficiary and that MERS and its successors and assigns had the authority to foreclose on the subject property in the event of default by Plaintiff.” This language, according to the court, gives MERS authority to foreclose on property and assign interest on behalf of a lender. For the above reasons, the court granted Defendants’ motion to dismiss Plaintiff’s claims.

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