Tuesday, September 6, 2011

Unanswered Questions On MERS' Role In Washington State Foreclosures To Be Decided By State High Court; Fed. Judge Referral Shortcuts Drawn Out Process

In Washington State, The Oregonian reports:

  • Washington state's highest court is set to determine whether thousands of pending foreclosures can proceed out of court, potentially averting months of conflicting and murky rulings. The court will hear arguments over whether lenders can file foreclosures in the name of MERS, a private company that owns a computerized mortgage registry system.

  • Big lenders, including Fannie Mae, Freddie Mac and several large U.S. banks, created MERS in 1995 to get around cumbersome laws that required paperwork to be filed with county clerks when a mortgage changed hands.


  • If the court rules against MERS, it could force thousands of foreclosures into court that would otherwise have been handled without ever going before a judge. And any decision could bring some order to a hodgepodge of state and federal rulings in wrongful foreclosure complaints -- at least, in Washington. Elsewhere, including Oregon, similar cases continue their long slog toward Supreme Court resolution, a legislative fix or a different tack by lenders.

  • At issue is whether MERS meets the definition of a beneficiary under Washington law, and therefore whether it can legally file a foreclosure on a lender's behalf. "MERS cannot meet that definition because MERS is never a note holder," said Melissa Huelsman, an attorney representing Kristin Bain, one of the homeowners in the case. "They are simply a name on a piece of paper sitting there for the purposes of record keeping."


  • In Washington, the questions went to the Supreme Court at the order of U.S. District Judge John C. Coughenour.(1) That expedites a case that could have taken years to reach the Supreme Court, Huelsman said. "This is absolutely a shortcut to get it there," she said.

For more, see Washington Supreme Court to weigh legality of MERS foreclosures.

(1) See Bain v. OneWest Bank, Case No. C09-0149-JCC (W.D. Wash. March 15, 2011) for Judge Coughenour's order deferring on ruling on this issue of state substantive law until the Washington State Supreme Court decides the issue.

In refusing get sucked into the foreclosure fraud muck and add to the nationwide confusion as to whether MERS can or can't 'soil' foreclosure proceedings with its involvement, Judge Coughenour made these comments in deciding to defer to the Supreme Court of Washington (the court most qualified to decide questions of state substantive law in Washington state) until it rules as to whether MERS has any business playing a role in foreclosures under the law of the state of Washington (bold text is my emphasis; [alteration added] to adjust an apparent judicial/administrative oversight in transcribing the text):

  • This Court does [not] need to add even more pages to the legal discourse discussing whether MERS may serve as a beneficiary in deeds of trust generally. Compare, e.g., Silvas v. GMAC Mortg., LLC, No. CV-09-265-PHX-GMS, 2009 WL 4573234 (D. Ariz. 2009) (favoring MERS); Pantoja v. Countrywide Home Loans, Inc., 640 F. Supp. 2d 1177, 1188-89 (N.D. Cal. 2009) (favoring MERS), with, e.g., Mortg. Elec. Registration Sys., Inc. v. Sw. Homes of Ark., 301 S.W.3d 1 (Ark. 2009) (favoring borrower); In re Agard, No. 810-77338-reg (E.D.N.Y. Bankr. Feb. 10, 2011) (favoring borrower). See also Christopher L. Peterson, Foreclosure, Subprime Mortgage Lending, and the Mortgage Electronic Registration System, 78 U. Cin. L. Rev. 1359 (2010).

    Nor will the Court discern, more narrowly, whether MERS may serve as a beneficiary under Washington's Deed of Trust Act. That answer remains patently unclear. See Certification Order, Vinluan v. Fidelity National Title & Escrow Co., No. 10-2-27688-2 SEA (King Cnty. Superior Ct. Jan. 18, 2011). Because a state circuit court has recently certified this very question to the Washington Supreme Court, this Court declines to decide the issue before the Washington Supreme Court evaluates it.


  • Plaintiff admits that she has been delinquent in her mortgage payments. A ruling favorable to Plaintiff in this case and others like it cannot and should not create a windfall for all homeowners to avoid upholding their end of the mortgage bargain—paying for their homes. But a homeowner's failure to make payments cannot grant lenders, trustees, and so-called beneficiaries like MERS license to ignore state law and foreclose using any means necessary. Whether these and similar defendants complied with Washington state law remains unclear.


  • The Court STAYS this action pending the Washington Supreme Court's decision in Vinluan v. Fidelity National Title & Escrow Co., No. 10-2-27688-2 SEA. Counsel for the parties shall notify the Court when the Washington Supreme Court decides whether to accept certification and, if so, when it renders an opinion.


Note: Judge Coughenour deserves to be commended for:

  • making it clear that a homeowner's mere failure to make house payments does not "grant" the banksters "license" to trample over the rule of law when carrying out foreclosure proceedings (a point that seems to fall outside the intellectual grasp of the banksters, and their enablers and apologists),

  • taking this position, notwithstanding any personal feelings he may have against attempts by homeowners to score, as he put it, "a windfall" by dodging their responsibility for paying for what they bought (regrettably, many trial judges find great difficulty in setting aside their personal feelings in this regard while seemingly ignoring the fraudulent conduct by the banksters and their foreclosure mill conspirators - a point evidenced by the growing number of lower court rulings being challenged and reversed on appeal).

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