Scarborough v. LaSalle Bank National Association

Summarized by Andrew Johnson , Onsager | Fletcher | Johnson | Palmer LLC
14 years 1 month ago

Citation:

11-4092

Tag(s):

Ruling:

Securitization and pooling of a mortgage that names MERS as the beneficiary does not prevent the beneficiary named in the mortgage from initiating a foreclosure under Utah law.

Procedural context:

Borrower / mortgage grantor defaulted under his mortgage, which resulted in a foreclosure sale of borrower's house. Borrower / mortgage grantor sued lender, MERS, the trustee of the trust which owned borrower's mortgage in the United States District Court for the District of Utah. Borrower alleged that defendants lacked the authority to foreclose on borrower's property because only the investors who owned the mortgage could foreclose. Defendants filed a motion to dismiss, which the District Court converted to a motion for summary judgment and granted. Tenth Circuit Court of Appeals affirmed the summary judgment in favor of defendants.

Facts:

To purchase a house in Utah, debtor borrowed $237,000 from First Franklin Financial Corporation. The loan was secured by a mortgage naming MERS as the beneficiary and the mortgage was recorded in the appropriate office in Utah. First Franklin sold a number of mortgages, including debtor's, to Merrill Lynch, which created a trust and pooled many such mortgages together. LaSalle Bank was appointed the trustee of the trust. Interests were then sold in the trust to investors. Thus, borrower's mortgage was bundled, securitized and sold. Borrower stopped paying on the mortgage and MERS initiated a foreclosure sale. The property was sold to US Bank (successor to Bank of America, which was successor to LaSalle Bank).

Judge(s):

Briscoe, Ebel and Lucero

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