By Jeff Barnes, Esq.

This is not an endorsement of the above Law Firm. It is simply to share the information below.

“As we previously advised on this website, the decision of the Supreme Court of Kansas which attacked MERS assignments has literally subjected some sixty (60) million mortgage foreclosures to challenge. Notwithstanding the wealth of recent court decisions on the fallacy behind and  the legal invalidity of MERS assignments, several jurisdictions (most notably Arizona and, to some extent, Hawaii) still blindly believe that simply because a MERS Assignment of Mortgage states that the mortgage is assigned “together with the Note or indebtedness” that such language also legally transfers the interest in the Note from the original lender (or whoever claims to be the then-holder) to the assignee of the Mortgage. We feel that it is important to advise our readers of how several courts throughout different jurisdictions in the United States have examined this issue and have uniformly held that MERS assignments DO NOT transfer any interest in the Note.

The standard MERS language in a Mortgage (or Deed of Trust as it is termed in nonjudicial states, or Security Deed as it is termed in Georgia) provides that “MERS is a separate corporation and is the beneficiary”. However, this language ONLY appears in the Mortgage or Deed of Trust; it DOES NOT APPEAR IN THE NOTE. However, the standard MERS assignment nonetheless purports to transfer not only the mortgage (or Deed of Trust), but also the Note without any authority for doing so.

The U.S. Bankruptcy Court for the District of Idaho understands the distinction. In the case of In Re: Wilhelm et al., Case No. 08-20577-TLM (opinion of Hon. Terry L. Myers, Chief U.S. Bankruptcy Judge, July 9, 2009), Chief Federal Bankruptcy Judge Myers analyzed the decisional law as to MERS’ purported standing to assign the Note where MERS was nothing more than the “nominal beneficiary” under the Deed of Trust. The Court concluded that even if MERS is granted authority to foreclose if required by “custom or law” (as set forth in the Deed of Trust), this language does not, either expressly or by implication, authorize MERS to transfer promissory notes.

The Court cited to the cases of Saxon Mortgage Services v. Hillery, 2008 WL 5170180 (N.D. Cal., Dec. 9, 2008) and Bellistri v. Ocwen Loan Servicing, LLC, 2009 WL 531057 (Mo. Ct. App. March 3, 2009) as being in accord, holding that MERS presents no evidence as to who owns the note or of any authorization to act on behalf of the present owner of the note. Both cases were effectively dismissed (Hillery by outright dismissal; Bellistri by summary judgment), finding that there was no standing as there was no authority for the MERS assignment of the note. The Wilhelm Court quoted the pertinent portion of the Bellistri opinion:

“The record reflects that BNC was the holder of the promissory note. There is no evidence in the record or the pleadings that MERS held the promissory note or that BNC gave MERS the authority to transfer the promissory note. MERS could not transfer the promissory note; therefore the language in the assignment of the deed of trust purporting to transfer [the] promissory note is ineffective.”

The Wilhelm court thus held that the various movants, who claimed to be “secured creditors” by virtue of MERS assignments, could not rely on the MERS assignments to establish an interest in the notes and that because they thus could not prove ownership in and possession of the notes, they were not the real party in interest and lacked standing to seek relief from the automatic stay.

This critical and distinct legal issue is paramount in any foreclosure defense in a case where the foreclosing party attempts to rely on a MERS assignment. The rule of law is clear: as the note does not provide MERS with any authority of any kind, MERS, notwithstanding its claimed status as “nominee” under the Mortgage or Deed of Trust or assignment, CANNOT transfer the Note as it has no legal authority to do so, and thus any party seeking to foreclose based on a MERS assignment is seeking to do so without proper legal standing as it is not the real party in interest as to the Note (and as the foreclosing party must be in actual possession and ownership of both the Note and the Mortgage/Deed of Trust in order to be legally entitled to seek foreclosure).

More and more courts throughout the United States are understanding this issue and are issuing opinions striking down MERS assignments. Hopefully those who still cling to the myth that a MERS assignment of mortgage also transfers the Note will read these well-written and thought-out decisions and realize what the law actually is.”