9th CIRCUIT AFFIRMS MERS WITH INSTRUCTIONS ON HOW TODEFEAT FORECLOSURE
Posted on September 8, 2011 by Neil Garfield, ESQ., MBA on his LivingLiesWeblog.
HOW CERVANTES COULD HAVE BEEN DECIDED THE OTHER WAY
SIGNIFICANT QUOTES FROM CERVANTES CASE, 9TH CIRCUIT:
“In the event of a default on the loan, the lender may initiateforeclosure in its own name, or may appoint a trustee toinitiate foreclosure on the lender’s behalf. However, to havethe legal power to foreclose, the trustee must have authority toact as the holder, or agent of the holder, of both the deed andthe note together. See Landmark Nat’l Bank v. Kesler, 216 P.3d158, 167 (Kan. 2009).” 16985
“The deed and note must be held together because the holderof the note is only entitled to repayment, and does not have theright under the deed to use the property as a means of satisfying repayment.” 16986
“the holder of the deed alone does not have a right torepayment and, thus, does not have an interest in foreclosingon the property to satisfy repayment” 16986
The 9th Circuit Court of Appeals (Federal) has issued a decision inCervantes that will no doubt be cited by pretender lenders all acrossthe country. BUT, if you read the decision carefully, you can see thatthere were errors in pleading perceived by the Court. Correctingthose errors might change the result completely.Beth Findsen, Esq., one of the foremost scholars and legal writers of the country believes that the decision points the way to a successfulaction against the use of MERS. “There is some helpful languageamong the detritus here,” she said. “The legality of MERS’ role as abeneficiary may be at issue where MERS initiates foreclosure in itsown name, or where the plaintiffs allege a violation of staterecording and foreclosure statutes based on the designation. Para.7″. The obvious point here is that if MERS is the forecloser or if thehomeowner alleges that the designation of MERS violates staterecording statutes or alleges a violation of state foreclosurestatutes, the analysis would clearly be different.
She points out that the Court thought it important to state that “Theplaintiffs’ allegations do not call into question whether the trustees wereagents of the lenders. Para. 8″. This is an important signal from the Court of Appeals. They see the point. If the Trustees were agents of the putativelenders, then the analysis would also be different. How? Because if thetrustees were agents of the pretender lenders who initiated the foreclosure,it would obviously mean two things: (a) the trustees did not qualify astrustees because they were not serving in the capacity designed by the