August 17, 2012
In a 41-page opinion, the Supreme Court of Washington has held, in answering three questions as to MERS certified to the Washington Supreme Court from the Washington Federal Courts, that MERS is not the beneficary under the Washington Deed of Trust Act, and that a homeowner may have a cause of action against MERS for violations of the Washington Consumer Protection Act (CPA), as “characterizing MERS as the beneficiary has the capacity to deceive”. This decision is in concert with the recent Niday decision from the Oregon Court of Appeals which held that MERS is not the beneficiary under the Oregon Deed of Trust Act. However, the Washington opinion, Bain v. Metropolitan Mortgage Group, IndyMac Bank, MERS et al., goes further.
The opinion goes through a detailed history of the Washington Deed of Trust Act, MERS, and MERS’ claims in connection with foreclosures. The first certified question, which asked whether MERS is the “beneficiary” under the Washington Deed of Trust Act, was answered in the negative, as the Court found that because MERS never held the promissory note (and could not) and as the only party who could be the beneficiary is the person who holds the note that MERS was not and could not be the beneficiary under RCW 61.24.005(2).
The Court answered the third certified question with a qualified “yes”: that a homeowner, with the right facts, has a cause of action against MERS for damages where MERS wrongfully claims that it is the “beneficiary”. The Court held that each such claim would have to be evaluated on a case by case basis.
Several significant findings are in this opinion which serve to dispel “MERS myths” blindly accepted by other courts and argued by MERS attorneys. The first, which we believe to be the most significant, is that MERS cannot contract around statutory terms, meaning that MERS cannot, by contract, change its status to “beneficiary” in a Deed of Trust and cannot claim that it is an “agent”. The Court fouind that MERS “as nominee” for a undisclosed successor noteholder cannot thus be an “agent”. As we all know, courts in several other jurisdictions have, without explanation or distinction as to MERS’ self-claimed “nominee” status, held MERS to be an “agent.” This opinion finally explains why those conclusions are erroneous and are not supported by law.
The second point is that because MERS does not hold the note and as MERS’ counsel admitted that MERS cannot engage in efforts to reach a solution to avoid foreclosure, it could not be the “beneficiary”.
The third point is that because only the rightful beneficiary can undertake actions such as appointing a successor trustee and as MERS, which never holds the Note, cannot undertake foreclosure prevention actions, MERS is not the “beneficiary”.
The two recent rulings in Oregon and now Washington are finally exposing and debunking the MERS’ myths and misconceptions. We are hopeful that other courts will take note of these extremely detailed and well-reasoned opinions when presented with questions as to MERS, including the discrepaney as to what MERS claims it is (a “mere nominee”) and what it claims it can do (foreclose, execute assignments and substitutions of trustee, and the like).
We thank one of our network attorneys for bringing this decision to our attention last night.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com