Lenders have lost an excuse for not foreclosing – from MND:
Two Appellate Courts in California, citing two separate rationales, have upheld the legal standing of MERS to foreclose.
In Calvo v. HSBC a deed of trust signed by Calvo identified CBSK Financial Group as the lender and MERS as the nominal beneficiary and lender’s agent. HSBC acquired the Calvo loan, retaining MERS as its nominee but never recording an assignment of the deed of trust. When Calvo defaulted HSBC initiated a non-judicial foreclosure.
The plaintiff has sued to set aside the trustee’s sale for an alleged violation of Section 2932.5 of the California Code which requires the assignee of a mortgagee (court’s emphasis) to record an assignment before exercising a power to sell real property.
On September 12 the three justices of the Second District said the complaint was irrelevant as it applied only to mortgages, not to deeds of trust. The Court, in fact, called the section of the code “practically obsolete and… generally ignored by borrowers, creditors, and the California courts.
The other suit, Robinson v. Countrywide, arises out of a loan from SBMC Mortgage also secured by a deed of trust naming MERS as “acting solely as a nominee for Lender and Lender’s successors and assigns,” and stating that “MERS is the beneficiary under this Security Instrument.”
Subsequently Countrywide Mortgage, identifying itself as a debt collector and servicer of the loan notified the plaintiffs that their loan was delinquent but failed to respond for requests for documents and information from the plaintiff’s attorneys and later transferring the loan to its foreclosure management committee and then to ReconTrust which purported to be acting as agent for the beneficiary of the deed of trust. Robinson alleged that their note was “sold and resold” on the secondary market and it had become difficult or impossible to determine its actual owner and that the identity of the person or entity that currently holds an ownership interest is unknown.
On September 12, the Fourth District Court citing its own May decision in Gomes v. Countrywide, stated that “the statutory scheme…does not provide for a preemptive suit challenging standing. Consequently, plaintiffs’ claims for damages for wrongful initiation of foreclosure and for declaratory relief based on plaintiffs’ interpretation of section 2924, subdivision (a), do not state a cause of action as a matter of law.”
…as it should!
The suit is going forward against ReconTrust who will look to MERS for indemnification if they lose. It may even be a compulsory cross-complaint, but I haven’t seen the pleadings.
I note this went back to no sign-in. I prefer this to using Facebook or any of the other social networking sites. They are collecting way too much information for my liking.
I note this went back to no sign-in.
Changes here are almost always a result of me going behind the curtain and pushing a bunch of buttons.
Sorry to be behind on this story, but the actual “owners” of the property (who cannot be identified) are not the ones foreclosing? Who decides then?
Isn’t there a fee each time the owner changes hands?
shopping – by “owners” i believe you mean ‘lenders’ are the ones foreclosing. Think of MERS as a Trust with MERS being the Trustee making decisions on behalf of the Trust whose Beneficiaries are the actual lenders (or owners of the securities which make up the pool of loans).
Its not as complicated as people try to make it out to be.
Agreed – people were hoping to get out on a technicality and have a wimpy judge give them a free house.
I’m glad to see that it didn’t take a multi-billion dollar settlement to solve it!
I think it also sets the table for the 50-state AG settlement to end up tasting like a six-pack of warm PBR. Banks, and bankers rule!
This is probably more legal mumbo jumbo than most folks want to get into around here, but the result of the recent Calvo v. HSBC case above is not as obvious as it may seem. HSBC acquired the loan without recording an assignment and instead relying on the MERS system. On its face, foreclosing without recording an assignment appears to violate California Civil Code Section 2932.5 which states:
“Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.”
The Calvo case gets around this statute by distinguishing the concept of a deed of trust, in which title is technically transferred by a borrower to a trustee, from a mortgage. They essentially conclude that the beneficiary of a deed of trust is not an “other encumbrancer” under the statute
Our local Bankruptcy Court concludes the exact opposite, that there is no meaningful distinction between mortgages and deeds of trust and that Civil Code section 2932.5 is designed to protect borrowers from confusion as to the ownership of their loans. MERS and their unrecorded assignees will lose to borrowers on this point in Bankruptcy Court.
In Re Salazar:
http://www.casb.uscourts.gov/pdf/opinions/10-17456.pdf
The Calvo case notes this disagreement in footnote 2 of the decision. So it remains the case that borrowers that want to raise MERS issues can have success in bankruptcy court, but they are basically SOL on this issue in California State Courts.
The links from the article above are from the MERS site. You don’t find links such as In Re: Salazar there.
Thank you all–I knew I was missing something…