Two Courts Uphold MERS Foreclosure Rights

Two Appellate Courts in California, citing twornseparate rationales, have upheld the legal standing of MERS to foreclose.  </p

In Calvo v. HSBC  a deed of trust signed by Calvo identifiedrnCBSK Financial Group as the lender and MERS as the nominal beneficiary andrnlender’s agent.  HSBC acquired the Calvo loan,rnretaining MERS as its nominee but never recording an assignment of the deed ofrntrust.   When Calvo defaulted HSBCrninitiated a non-judicial foreclosure. The plaintiff has sued to setrnaside the trustee’s sale for an alleged violation of Section 2932.5 of thernCalifornia Code which requires the assignee of a mortgagee (court’s emphasis) to record an assignment beforernexercising a power to sell real property. rnOn September 12 the three justices of the Second District said therncomplaint was irrelevant as it applied only to mortgages, not to deeds ofrntrust.  The Court, in fact, called thernsection of the code “practically obsolete and… generally ignored by borrowers,rncreditors, and the California courts.</p

The other suit, Robinson v. Countrywide, arises out of a loan from SBMCrnMortgage also secured by a deed of trust naming MERS as “acting solely as a nomineernfor Lender and Lender’s successors and assigns,” and stating that “MERS is thernbeneficiary under this Security Instrument.” rn Subsequently CountrywidernMortgage, identifying itself as a debt collector and servicer of the loanrnnotified the plaintiffs that their loan was delinquent but failed to respondrnfor requests for documents and information from the plaintiff’s attorneys andrnlater transferring the loan to its foreclosure management committee and then tornReconTrust which purported to be acting as agent for the beneficiary of therndeed of trust.  Robinson alleged thatrntheir note was “sold and resold” on the secondary market and it had becomerndifficult or impossible to determine its actual owner and that the identity ofrnthe person or entity that currently holds an ownership interest is unknown.</p

On September 12, the Fourth District Court citingrnits own May decision in Gomesrnv. Countrywide, stated thatrn”the statutory scheme…does not provide for a preemptive suit challengingrnstanding. Consequently, plaintiffs’ claims forrndamages for wrongful initiation of foreclosure and for declaratory relief basedrnon plaintiffs’ interpretation of section 2924, subdivision (a), do not state arncause of action as a matter of law.”

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