Feb 18, 2011. A Californian Appellate Court Gomes v Countrywide D057005 02182011 upheld that MERS has the authority to transfer the mortgage despite numerous other cases to the contrary. This has a huge implication to homeowners in CA and consequently all over the country.
When I first read this, I was quite devastated. Could this be the nail on the coffin for homeowners? Will banks start using this case to defend MERS against illegal transfers?
Well, yes and no.
I think making the claim that MERS does not have the authority to transfer the mortgage/Deed of Trust is significantly weakened due to this case. However, it still does not answer to the question of Standing and the real party of interest as described by Carpenter v. Longan which basically says, the Deed of Trust follows the Promissory note, not the other way around. He who controls the Deed of Trust without controlling the note is in reality controlling nothing… and that’s what this MERS decision comes down to. Who owns the Promissory Note?
So, if you have MERS on your mortgage and you intend to use MERS as your defense, then you ought to restructure your arguments based on the Bifurcation issue. Basically, the Deed of Trust and the Promissory Note needs to be pointing at the same party at all times. Once that is separated, we have a defective instrument…and a defective instrument is not enforceable.
If you are in California, your best bet is to file your case in Federal Bankruptcy court in an Adversary Proceeding. In Federal Bankruptcy court, you have the benefit of Federal Rules of Bankruptcy Rule 3001(d) – Perfected interest in real estate. Basically, it says that party wishing to claim they are a creditor must present PERFECTED evidence of chain of title linking from the original lender to the current foreclosing party. Opposing Counsel would like to have everyone believe that Perfection is achieved through the MERS assignment…giving the GOMES v Countrywide Appellate ruling. At this point, a savvy litigant would need to point out Carpenter v Longan to discredit the MERS argument…because we still don’t know who the real party of interest is.
Further support for the homeowner comes from the recent Massachusetts Supreme Ruling in US Bank v Ibenez which says, Perfection of the chain of title for both the promissory note and the deed of trust must be demonstrated to show standing.
If you are considering filing for Bankruptcy, you might want to learn more about our bankruptcy preparation service. It is designed to save homeowners money.
Vince