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Smith said the change would avoid confusing homeowners facing foreclosure by eliminating MERS, a company they had never heard of, from court documents.
Mortgage-loan servicers perform routine duties for the investment trusts that own pools of mortgages, including collecting mortgage payments and, when necessary, filing foreclosures.
Although these trusts are legally required to own the mortgages when they file to foreclose, the servicers in many cases did not obtain documents known as assignments on their behalf until weeks or months after launching a foreclosure action in court, a recent Reuters Special Report found.
Under the new rules, servicers are required to stop filing foreclosures in MERS’s name, but MERS’s role in foreclosures won’t actually be eliminated.
The servicers will continue to obtain the needed mortgage assignments from MERS.
A copy of the opinion in is available at: Link to Opinion.
Court of Appeals for the Fifth Circuit recently held that a purported defect in the assignment of a security instrument — that it was executed solely as “nominee,” and not as beneficiary – did not affect the rights of the beneficiary and its successors and assigns to foreclose the subject property, and entered judgment in favor of the mortgagee.In May 2007, a lender extended a mortgage loan, evidenced by a promissory note executed by the borrower and secured by a Texas Home Equity Security Instrument (“deed of trust”) to the borrower and his wife’s (“borrowers”) property. (MERS) was the named beneficiary in the deed of trust.The lender later was dissolved and its assets were transferred to a related entity (“lender’s successor”), and eventually placed in receivership by the FDIC, who sold substantially all of its assets to another bank in the spring of 2009. denied) (“The word ‘assign’ or ‘assignment’ in its most general sense means the transfer of property or some right or interest from one person to another.”).“Foreclosure really was not central to MERS’s core business,” she said, adding that MERS received no income from foreclosures.Mortgage-law specialists say that lenders and servicers for a long time relied heavily on bringing foreclosures in MERS’s name. Instead, it has designated some 20,000 employees of banks and other servicers as MERS “officers.” Some courts and homeowners’ lawyers have criticized this system because in effect it enables servicers to assign mortgages to themselves whenever they needed one to foreclose.On appeal by the trustee, the Fifth Circuit concluded that the magistrate incorrectly concluded that MERS’ assignment of the deed of trust to the trustee as ‘nominee for [lender],’ did not provide authorization for it to assign the deed of trust. Specifically, the trial court determined that the Fifth Circuit “clearly erred” in concluding that MERS assigned the deed of trust because it executed the assignment as “nominee,” suggesting it was acting only in an agency capacity for a principal, rather than its capacity as beneficiary. Even if acting only as nominee, it was still not erroneous to conclude that MERS validly assigned the deed of trust on behalf of an existing successor of the lender’s successor (as the trial court purported), because the FDIC necessarily had power to assign the rights under the note, including foreclosure rights. He also obtained extensive experience litigating property insurance claims through all phases of discovery, motion practice and other pre-trial activities.To the contrary, the Fifth Circuit held that, under Texas law and federal precedent, because MERS was named beneficiary on the original deed of trust, it had the authority to transfer its right to bring a foreclosure action to a new mortgagee by valid assignment, and did so in this instance. Because the lender’s successor was placed in receivership prior to assignment and the trustee failed to show that the FDIC, as receiver, sold the loan to another bank, the magistrate further concluded that there was no existing successor. Here, the trial magistrate judge construed this third exception to the law of case doctrine as a license to disagree with the Fifth Circuit if it was “clearly erroneous” and would “work a manifest injustice” if not overruled. The Appellate Court noted that MERS indisputably had authority to assign its beneficiary rights under the deed of trust to the bank under its permissible role as beneficiary and nominee thereunder, and validly did so despite its description as “nominee” on the assignment. Christopher obtained his Bachelor of Science degree in Business Administration from the University of Southern California, followed by his Juris Doctorate degree from the University of Miami School of Law.Thus, the magistrate judge concluded that no existing principal existed capable of assigning a right to foreclosure, and MERS’ purported assignment of such right as “nominee” was “void and absolutely invalid.” The trustee timely appealed. The instant second panel explained that it would only “reexamine issues of law addressed by a prior panel opinion in a subsequent appeal of the same case” if “(i) the evidence on a subsequent trial was substantially different, (ii) controlling authority has since made a contrary decision on the law applicable to such issues, or (iii) the decision was clearly erroneous and would work a manifest injustice,” noting that the third exception has rarely been employed. However, the Fifth Circuit reasoned that such conduct “would lead to chaos if routinely done,” and that even if the trial court had the authority to overrule the very legal point previously decided on appeal, absence intervening law or new facts, this case did not represent such extraordinary circumstances. He is also a graduate of the University of Miami’s Masters of Business Administration program, completing his degree with an emphasis on finance and mergers and acquisitions.On the instant appeal, review of the magistrate judge’s interpretation of the prior remand order was de novo, including whether the law-of-the-case doctrine or mandate rule (requiring a trial court to effect the appellate mandate) determined any of the lower court’s actions on remand. REUTERS/Rebecca Cook "/An abandoned and dilapidated home, one of 32 abandoned properties in the neighborhood listed on the auction block during the Wayne County tax foreclosures auction of almost 9,000 properties is seen in Detroit, Michigan, October 21, 2009. of Reston, Virginia, owns the computerized registry, Mortgage Electronic Registration Systems.Mortgage loan giants Fannie Mae and Freddie Mac and several of the largest U. banks established MERS in 1995 to circumvent the costly and cumbersome process of transferring ownership of mortgages and recording the changes with county clerks.