Nevada Homeowners Seek Preliminary Injunction To Halt MERS' Foreclosures

In Las Vegas, Nevada, the Las Vegas Sun reports:

• A bankruptcy judge here, joining judges across the country, is throwing a bit of sand in the gears of the mortgage machine and its ruthless foreclosure blade. She has raised this issue: In many home foreclosures springing out of bankruptcy proceedings, the foreclosure is being triggered by a representative of the lender — a surrogate that may not have a legal, equity stake in the proceedings. As a result, it is conceivable — though still something of a legal long shot — that the homeowner who is filing for bankruptcy protection could end up saving his house.

• The argument that a lender’s surrogate can’t trigger foreclosure has drawn notice of Nevada homeowners, who are preparing a class action lawsuit. They are seeking a preliminary injunction this month to stop their foreclosures.(1)

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• [I]n a Las Vegas case this spring, federal Bankruptcy Judge Linda Riegle ruled that MERS had no standing because the company is not the real party in interest — it doesn’t actually own the loan. In other words, in the course of bankruptcy proceedings, MERS had no claim to the house.(2)

For more, see Ruling by judges rattles mortgage industry (Some foreclosures may at least be slowed).

(1) Reportedly, University of Utah law professor and former consumer rights attorney Christopher Peterson has been hired by the Reno law firm Hager & Hearne as an expert witness in a class action lawsuit that will seek to invalidate the right of MERS to trigger foreclosure. Their case will rely heavily on a recent Kansas Supreme Court ruling [see Landmark Nat'l Bank v. Kesler, No. 98,489, 2009 Kan. LEXIS 834 (August 28, 2009)]. In that complicated foreclosure case, the court decided this month that MERS had “no right to the underlying debt repayment secured by the mortgage ...”

(2) In re Mitchell, Case No. BK-S-07-16226-LBR (D. Nev. 2009).