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But, in this latest decision, the bankruptcy judge in California didn’t agree, writing in his opinion:
“Since no evidence of MERS’ ownership of the underlying note has been offered, and other courts have concluded that MERS does not own the underlying notes, this court is convinced that MERS had no interest it could transfer to Citibank. Since MERS did not own the underlying note, it could not transfer the beneficial interest of the Deed of Trust to another. Any attempt to transfer the beneficial interest of a trust deed without ownership of the underlying note is void under California law.”
Did you get that? Since MERS didn’t own the underlying note, it couldn’t transfer the beneficial
Before a plaintiff (lender/servicer) can establish a prima facie case and file for foreclosure against a homeowner, he/she must satisfy the threshold questions of proving that the mortgage and mortgage note exist, ownership of the mortgage, and the defendant’s default in payment. Campaign v. Barba, 23 A.D.3d 327 (2d Dept. 2005). Put another way, if one does not have title to a mortgage, then that person cannot foreclose on that very same mortgage Kluge v. Fugazy, 145 A.D.2d 537 (2d Dept. 1988). This applies to lenders who are assigned the note and mortgage from the original lender or from a servicer such as MERS who received as nominee, or a middle party, from the original lender. A plaintiff lacks standing where there is no proof that that both the mortgage and the note have not been assigned to plaintiff. HSBC Bank USA v. Miller 26, Misc.3d 407 (NY Sup Ct, Sullivan County 2009). Proof of the mortgage alone being assigned is not
Unfortunately, the courts in Bellistri and Hawkins were provided insufficient explanations and evidence to demonstrate that MERS’ agency relationship falls within the exception. Consequently, while such litigation will continue – for the short run, anyway – the net result may be favorable for MERS, with changes in the law that finally recognize and incorporate the utility of the MERS system.
Plaintiff brought this as a Common Law action for the recovery of the possession of Lot 19 Fairview Beach, Scott County, Minn. Plaintiff claimed title to the Real Property in question by foreclosure of a Note and Mortgage Deed dated May 8, 1964 which Plaintiff claimed was in default at the time foreclosure proceedings were started.
Defendant appeared and answered that the Plaintiff created the money and credit upon its own books by bookkeeping entry as the consideration for the Note and Mortgage of May 8, 1964 and alleged failure of the consideration for the Mortgage Deed and alleged that the Sheriff's sale passed no title to plaintiff.
Mr. Morgan admitted that all of the money or credit which was used as a consideration was created upon their books, that this was standard banking practice exercised by their bank in combination with the Federal Reserve Bank of Minneapolis, another private Bank, further that he knew of no United States Statute or Law that gave the Plaintiff the authority to do this. Plaintiff further claimed that Defendant by using the ledger book created credit and by paying on the Note and Mortgage waived any right to complain about the Consideration and that the Defendant was estopped from doing so.
At 12:15 on December 7, 1968 the Jury returned a unanimous verdict for the Defendant.