UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF CALIFORNIA
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…