California | Bankruptcy Judge Denies MERS, Foreclosure Sale Void, “MERS System is not an Alternative to Statutory Foreclosure Law”

In re:



While US Bank meets the minimal test for standing to seek relief from stay, Salazar’s foreclosure sale challenge must still be addressed to resolve the merits of US Bank’s relief from stay motion. Relying upon controlling California statutory and decisional authority, the Court concludes MERS’ original involvement in this loan does not provide talismanic protection against US Bank’s foreclosure deficiencies. US Bank’s failure to record its beneficiary status before foreclosure left Salazar with equitable title to his residence. Although this equitable title must be finally established in an adversary proceeding rather than a relief from stay motion, Salazar has demonstrated a prima facie case that the foreclosure sale was void. Salazar thus has a significant property interest entitled to protection by the automatic stay, and the Court denies relief at this time.


Even though US Bank has standing to seek relief from stay as the record title owner of the Property, Salazar currently has an equitable title interest for the automatic stay to protect. The Court rejects the claim that MERS’ limited role in the DOT provides it carte blanche authority over the nonjudicial foreclosure process. To enable the bankruptcy and foreclosure issues between the parties to be efficaciously addressed, the Court denies the Motion without prejudice. A status conference will be held on this matter on April 21, 2011 at 2:00 p.m. in this Court to determine the amount of the adequate protection payments to be provided to US Bank and to schedule necessary future proceedings consistent with this ruling.

Full ruling below…



In Re Eleazar Salazar United States Bankruptcy Court Southern District of California
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5 Responses to “California | Bankruptcy Judge Denies MERS, Foreclosure Sale Void, “MERS System is not an Alternative to Statutory Foreclosure Law””
  1. kelly says:

    Just my gut by I think Calif. judges are turning a corner. A judge has advised in our favor on the majority of our case to proceed against Chase. It is a 1st step, but an important one.

  2. Steve says:

    What happens to all the foreclosures that the lender used MERS as the beneficiary and also had back dated effective assignments?

  3. l vent says:

    This ruling is the bomb! Way to go Judge!!! Truth, justice is supposed to be the American way. Crime is not supposed to pay.

  4. Pamela says:

    Right on Calif. now lets see some more of this.We’ve been waiting far too long for these results and they need to happen more often than not!!

  5. Great decision! We have been saying all along, there is no difference between a mortgage and deed of trust. Both are just security. 2932.5 applies and assignments of deeds of trust must be properly recorded. Nice to see a judge laying that out.

    Steve Vondran, Esq.
    CA / AZ

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