Editor: David Reiss
Brooklyn Law School

February 28, 2013

Utah District Court Holds that MERS Is Authorized to Begin Non-Judicial Foreclosure Despite the Lender’s Sale of the Loan

By Justin Rothman

In King v. American Mortgage Network, Inc., No. 1:09 CV 162 DAK, 2010 WL 3516475 (D. Utah Sept. 2, 2010), the United States District Court of Utah held that MERS and Chase Home Finance (“Chase”) were authorized to begin non-judicial foreclosure of the plaintiff’s property. In November 2007, Plaintiff received a loan to purchase a property in Utah. Pursuant to the loan, the plaintiff signed a promissory note and a deed of trust. MERS was designated as the beneficiary of the deed of trust and as nominee for the lender and the lender’s assigns. The deed of trust gave MERS authority to foreclose. The lender sold the note to a third party, the Federal National Mortgage Association (“Fannie Mae”), in February 2008. Shortly thereafter, the servicing rights under the note and deed of trust were transferred to Chase. Plaintiff then defaulted under the terms of the loan.


Plaintiff argued that Chase and MERS did not have authority to begin foreclosure of the deed of trust on the plaintiff’s property because the note and deed of trust “split” when the note was sold by the lender. The court disagreed with the plaintiff and stated that there is “no disconnection between the note and mortgage” when MERS is acting as nominee for a lender. While Fannie Mae now owns the note, Chase is the authorized loan servicer on behalf of Fannie Mae. Moreover, MERS is the nominal beneficiary under the deed of trust as agent for Fannie Mae and its “successors and assigns,” which includes Chase. The court concluded that Chase and MERS were “clearly authorized to act on behalf of the holder of the Note, Fannie Mae, to begin foreclosure of the Property.” Thus, the court dismissed the plaintiff’s claims against the defendants.

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