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Servicing

Idaho Supreme Court secures MERS role as beneficiary

The Mortgage Electronic Registration Systems is empowered to transfer foreclosure rights as the rightful beneficiary of a deed of trust, the Idaho Supreme Court ruled in a decision this week.

The case essentially green lighted a foreclosure that has been on delay for months and gives MERS precedence to defend its ability to transfer foreclosure rights as the ‘named beneficiary of a deed of trust’ in Idaho. 

As the named beneficiary and a mortgage registry, MERS is often responsible for appointing all successor trustees to the original lender, ultimately resulting in the transfer of foreclosure rights to different parties.

In the Edwards v. MERS case, the homeowner pushed back after Pioneer Lender Trustee Services launched foreclosure proceedings.

The homeowner suggested that listing MERS as beneficiary of the trust was not enough to give MERS the authority to appoint Pioneer as a successor trustee with foreclosure rights.

The Idaho Supreme Court disagreed holding that “the beneficiary has the authority to appoint a successor trustee and MERS, as nominee of the lender, had the authority to appoint Pioneer as successor trustee.”

With that power comes the ultimate authority to grant Pioneer foreclosing authority, the court added.

The court also defended MERS role as beneficiary, saying in Idaho a beneficiary is the "person named or otherwise designated in a truste deed as the person for whose benefit a trust deed is given, or his successor in interest."

MERS argued the benefit it received as beneficiary was the authority to take all actions for the lender, including the right to direct a trustee to foreclose.

"MERS is the beneficiary under this security instrument," the court wrote. "Thus, MERS, as beneficiary, was acting solely as the nominee of the lender and its successors and assigns."

kpanchuk@housingwire.com

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