Monday, October 8, 2012

Nevada Supreme Court: OK To Foreclose When Note, Mortgage Are Split, Provided Ownership Of Both Are Reunified When Process Is Initiated

In Las Vegas, Nevada, the Las Vegas Review-Journal reports:

  • The Nevada Supreme Court has sided with banks by validating a key cog in the foreclosure enforcement machinery that has sparked legal disputes all over the country.

    In a 26-page ruling delivered Thursday, all seven justices agreed that hundreds of thousands of home mortgages in the state involving the Mortgage Electronic Registration System Inc. could be put into foreclosure after technical adjustments.
  • In Nevada, attorney Jacob Hafter said, who argued the case for homeowner David Edelstein, "the court has cleared a path to begin foreclosing in a mass effort."

  • Hafter had argued that once a loan has different note and deed holders, it is permanently flawed and precludes foreclosure. But the court concluded that returning the deed to the lender that holds the note fixes the defect, which is what happened in Edelstein's case. "Because nothing in Nevada law prohibits MERS' actions, we reject Edelstein's argument," the court wrote.
For more, see Supreme Court gives banks foreclosure win.

For the ruling, see Edelstein v. Bank of New York Mellon, 128 Nev. Adv. Op. 48 (September 27, 2012):
  • "We conclude that when MERS is the named beneficiary and a different entity holds the promissory note, the note and the deed of trust are split, making nonjudicial foreclosure by either improper.

    However, any split is cured when the promissory note and deed of trust are reunified. Because the foreclosing bank in this case became both the holder of the promissory note and the beneficiary of the deed of trust, we conclude that it had standing to proceed through the FMP [Nevada's Foreclosure Mediation Program]

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