Two Appellate Courts in California, citing two
separate rationales, have upheld the legal standing of MERS to foreclose.
In Calvo v. HSBC a deed of trust signed by Calvo identified
CBSK Financial Group as the lender and MERS as the nominal beneficiary and
lender's agent. HSBC acquired the Calvo loan,
retaining MERS as its nominee but never recording an assignment of the deed of
trust. When Calvo defaulted HSBC
initiated a non-judicial foreclosure. The plaintiff has sued to set
aside the trustee's sale for an alleged violation of Section 2932.5 of the
California Code which requires the assignee of a mortgagee (court's emphasis) to record an assignment before
exercising a power to sell real property.
On September 12 the three justices of the Second District said the
complaint was irrelevant as it applied only to mortgages, not to deeds of
trust. The Court, in fact, called the
section of the code "practically obsolete and... generally ignored by borrowers,
creditors, and the California courts.
The other suit, Robinson v. Countrywide, arises out of a loan from SBMC
Mortgage also secured by a deed of trust naming MERS as "acting solely as a nominee
for Lender and Lender's successors and assigns," and stating that "MERS is the
beneficiary under this Security Instrument."
Mortgage, identifying itself as a debt collector and servicer of the loan
notified the plaintiffs that their loan was delinquent but failed to respond
for requests for documents and information from the plaintiff's attorneys and
later transferring the loan to its foreclosure management committee and then to
ReconTrust which purported to be acting as agent for the beneficiary of the
deed of trust. Robinson alleged that
their note was "sold and resold" on the secondary market and it had become
difficult or impossible to determine its actual owner and that the identity of
the person or entity that currently holds an ownership interest is unknown.
On September 12, the Fourth District Court citing
its own May decision in Gomes
v. Countrywide, stated that
"the statutory scheme...does not provide for a preemptive suit challenging
standing. Consequently, plaintiffs' claims for
damages for wrongful initiation of foreclosure and for declaratory relief based
on plaintiffs' interpretation of section 2924, subdivision (a), do not state a
cause of action as a matter of law."