June 15, 2010

A Florida Circuit Court Judge has issued a 5-page written opinion dismissing a foreclosure filed by Aurora Loan Services, LLC finding that the Plaintiff (Aurora) lacked standing at the inception of the case and that the MERS assignment was invalid.

The court cited several Florida cases and the Bellistri v. Ocwen case from Missouri as to the necessity of standing being established and that it cannot be waived. Aurora claimed to have standing by an alleged “equitable transfer” of the note, possession of the original note, and the MERS assignment. The court stated very bluntly “These arguments are without merit”.

As to the “equitable transfer” argument, the court found that there was no indication in the assignment that the note and mortgage were physically transferred to Aurora, and could not have been in view of the second count of the Complaint to “enforce a lost note”. The “physical possession” argument was vitiated by the fact that the exhibits attached to the Complaint, including the Note and Mortgage, were executed in favor of an entity other than Aurora (which we all know is nothing more than a servicer which was the servicer for the now-bankrupt Lehman Brothers), and that when there is a conflict between what the Complaint alleges and what the exhibits show, the exhibits control. The court also found that none of the documents attached to the Complaint identified Aurora as the “holder”.

The Court went on to show why the MERS assignment was a legal nullity, citing the LaSalle Bank v. Lamy case from New York, the MERS v. Nebraska Department of Finance case, the Arkansas and Kansas Supreme Court cases on the lack of authority of MERS, the Saxon v. Hillery case from California, and the In Re Vargas case from the California Bankruptcy Court to demonstrate that MERS’ capacity is limited and that MERS had no authority to execute the assignment. The Court held the assignment to be invalid.

The Court finally noted that the lack of standing at the inception of the case is not a defect that may be cured by the acquisition of standing after the case is filed, citing a Florida appeals case from the same appellate court which issued the BAC Funding case on standing (which we previously discussed on this website).

The Court dismissed the foreclosure and reserved jurisdiction to address the borrower’s request for attorneys’ fees.

The importance of this April 28, 2010 opinion is severalfold: first, it shows that trial court Judges are willing to accept the law on MERS from other jurisdictions. Second, it shows that trial court Judges are going to hold foreclosing parties to their legal obligations of proving standing by competent evidence. Third, it shows that courts will dismiss legally infirm foreclosure cases and entertain borrower requests for attorneys’ fees in having to defend a legally infirm foreclosure.

Thanks to one of our devoted readers for providing us with this opinion today.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com