Editor: David Reiss
Brooklyn Law School

February 9, 2013

Utah District Court Holds that MERS has the Right to Foreclose on Property even though the Promissory Note was Sold for Purposes of Securitization

By Justin Rothman

In Commonwealth Property Advocates v. Citimortgage, Inc., No. 2:10 CV 00885 CW, 2011 WL 98491 (D. Utah Jan. 12, 2011), the United States District Court of Utah held that MERS had a right to foreclose the property at issue regardless of the fact that the note was sold for purposes of securitization. In this case, the plaintiff’s claim that Defendants cannot foreclose on the property is premised on the notion that Utah Code Ann. § 57-1-35 provides that when lenders transfer a note for securitization, “it loses the rights granted in the trust deed and the authority to foreclose.” MERS was named in the trust deed as beneficiary and “nominee for Lender and Lender’s successors and assigns, and the successors and assigns of MERS.”


The court rejected plaintiff’s interpretation of § 57-1-35 and dismissed plaintiff’s claim. It found that “Plaintiff offers no evidence or legal argument that MERS cannot contract for the right and power of foreclosure regardless of who holds the note, or the beneficial interest under the trust deed. Nor does Plaintiff demonstrate that such rights are actually ‘lost by transfer of the debt.’ Utah Code Ann § 57-1-35 does not address whether the parties can agree by contract to have someone other than the beneficial owner of the debt act on behalf of that owner to enforce rights granted in a trust deed.”

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