The 10th Circuit Court of Appeals upheld a lower court's ruling, giving the Mortgage Electronic Registration Systems and a trustee overseeing securitized loans standing to foreclose on a mortgage pooled into a securitization trust. 

Chad Scarborough initially filed the suit against the loan's trustee LaSalle Bank, First Franklin Mortgage Loan Trust, and MERS, a subsidiary of Merscorp Inc.

Scarborough pushed back against a foreclosure filed on his Salt Lake City home, claiming MERS, LaSalle and First Franklin had no authority to foreclose on his property. He also claimed investors who bought into residential mortgage-backed securities retained true ownership rights and were the only parties entitled to foreclose.

Scarborough asserted that "the trust deed had not been assigned or transferred of record, in whole or in part and that the named defendants, or one of them, was a mere custodian of the note for others," in court records.

The 10th Circuit disagreed with Scarborough's assertions and ruled for the defendants, saying there is no evidence showing the debt, itself, was securitized.

The appellate court agreed with the district court's assertion that "nothing had been presented that demonstrated that the certificates represented anything more than an interest in all proceeds or cash-flows paid corresponding to the note, independent and separate from any right to collect the debt as asserted by the plaintiff."

The court found there was nothing to show LaSalle was not the owner of the trust holding the debt based on information in the note.

In its ruling, the 10th Circuit said Scarborough's legal team did not provide proof to support claims that certificateholders, or RMBS investors, were the real owners of the promissory note.

The 10th Circuit is based in Denver and covers a region that includes Oklahoma, Kansas, New Mexico, Colorado, Wyoming and Utah.