MERS Takes Hit From California Bankruptcy Court On Standing To Foreclose On Homeowner

Housing Wire reports:

• A California bankruptcy court says Mortgage Electronic Registration Systems cannot help a trustee establish legal standing to foreclose on a securitized mortgage unless the trustee already possesses an actual assignment of interest in the loan.
• The case — Salazar v. U.S. Bank — comes out of California's Southern District U.S. Bankruptcy Court and is attracting attention from foreclosure attorneys as it seems to contradict another ruling, Gomes v. Countrywide.(1)

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• The bankruptcy court's decision is gaining attention from foreclosure attorneys in the state because it seems on the surface to contradict the Gomes v. Countrywide decision. In that case, the Court of Appeals of the 4th Appellate District said the language in a deed of trust gives MERS the authority to initiate a foreclosure.

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• [The Debtor's attorney, Francisco] Aldana[,] says the Salazar case is different from Gomes in that "in Gomes, the borrower, actually acknowledged that MERS can foreclose."
• "In the Salazar case, MERS was the beneficiary at the time of inception," but by the time, the deed of trust was foreclosed, "MERS was no longer the beneficiary," Aldana said.
• Comparatively, "in the Gomes case, MERS was the beneficiary at the same time," and the appellate court "did not want to interfere in a nonjudicial foreclosure."

For the story, see California bankruptcy court rules against MERS.

For the bankruptcy court ruling, see In re Salazar, ___ B.R. ___ (Bankr. S.D. Cal. April 11, 2011) (for publication).

(1) See California Appeals Court: Homeowner Can't File Lawsuit To Stop Foreclosure Process Based On Claim That Noteholder Did Not Authorize It.