July 7, 2014

The Maine Supreme Judicial Court has further debunked MERS’ alleged authority, vacated a foreclosure judgment, and affirmed sanctions against the attorney for Bank of America (which filed the foreclosure action) in its July 3, 2014 opinion in the matter of Bank of America v. Greenleaf, No. 2014 ME 89. The 24 page decision explains why BOA did not have standing to foreclose on the Mortgage despite having possession of the Note endorsed in blank, which the Court found only gave BOA the right to enforce the debt evidenced by the Note.

The Court held: “The interest in the note is only part of the standing analysis, however; to be able to foreclose, a plaintiff must also show the requisite interest in the mortgage…Thus, whereas a plaintiff who merely holds or possesses – but does not necessarily own – the note satisfies the note portion of the standing analysis, the mortgage portion of the standing analysis requires the plaintiff to establish ownership of the mortgage.” (original emphasis, case citations omitted here).

The Court then analyzed the MERS language in the Mortgage in the context of the purported MERS assignment to BAC. The Court concluded that “notwithstanding its reference to MERS as the ‘mortgagee of record’, the mortgage in fact granted to MERS ‘only the right to record the mortgage’ as the lender’s nominee, and ‘having only that right, MERS did not qualify as the mortgagee pursuant to our foreclosure statute.” The Court held that MERS did not have any right to foreclose on the property, and that the Mortgage only conveyed to MERS the right to record the Mortgage as nominee for the original lender. Thus, the MERS assignment to BAC only transferred what MERS had, which was a right to record the mortgage, period. The series of assignments demonstrated “the right to record the mortgage as nominee, but no more”.

The Court concluded that BOA lacked standing to seek foreclosure, and vacated the trial court’s foreclosure judgment.

The Court also affirmed the award of sanctions against BOA’s attorney who failed to comply with Maine’s civil procedure rules governing filings on summary judgment and had “inappropriately sought to create a foundation for the admission of the Bank’s business records by submitting an affidavit of his knowledge of the Bank’s recordkeeping practices” and other matters about which he lacked personal knowledge.

The Court also concluded that that the representative of BOA (who testified that she is a bank employee who testifies at trials) did not testify as to the requirements for the admissibility of the bank’s records under the business records exception to the hearsay rule (Rule 803(6)). There was no testimony as to how long or in what capacities she worked for the bank, what type of familiarity with the records were required for her job as “litigation liason”, and that her first encounter with the “Account Information Statement” (which BOA attempted to admit into evidence) was through obtaining the document from the law firm representing BOA in the foreclosure case and not through BOA. The Court found that the requirements of Rule 803(6) were not supported by the record.

This is the second recent decision which is finally unraveling the MERS myths which have been perpetrated on the courts nationwide for far too long. Brave to the Maine Supreme Court!

Jeff Barnes, Esq.,