Quote: If some knowledgeable person out there could answer a few questions on assignments. Deed of Trust Grantor: Me and Grantee: XX Trustee and YYY Mtg Co. THEN next assignment: Assign of Deed Grantor: MERS and Grantee: Wells. My question here is how can MERS appear an assignment when it was not listed in the previous assignment? Shouldn't MERS have been included in the first assignment in order for this to happen? MERS is on the DOT as beneficiary. Shouldn't the chain be A to B, B to C, C to D, D to E?
Need to know:
There are a lot of people who are either misinformed or seeking to deceive with regard to the role of assignments. And there also seems to be much confusion about the legal efficacy of assignments which seem to be defectively drawn or to be of questionable authority or validity.
Generally, the posts of Mr. Roper on this subject are the best sources of useful information about assignments at this Forum (use the search feature).
But it is helpful to retreat to some really basic law of real property to understand and appreciate the role assignments play.
The first central idea is that an assignment is a means of conveying an interest in real property. In this regard, assignments are very much like deeds. For this reason, usually in most places, assignments have to conform to the requisites of a state's statute of frauds.
When thinking about real property very often students are encouraged to think not in terms of a right, but rather as a bundle of rights. A study of ancient texts on the law of real property, such as Blackstone's Commentaries on the Laws of England (readily available online for free) shows the variety of rights that might be involved.
Permit me to share just a few by way of illustration. In antiquity, it was quite common for interests in land to be granted for the lifetime of the grantee. That is a Lord or Baron might vest in some knight or other trusted friend or subject the right to inhabit and use a tract of land for that person's lifetime only, with the land thereafter reverting to the grantor.
When this was done, the grantee received but a life estate in the land, while the grantor retained a reversionary interest. So what might have once been one unified interest in the tract of land becomes two interests. These might be reunited in the grantor or the grantor's heirs or assigns after teh grantee's death.
The grant of a leasehold estate is a similar fractional interest in land. The lessee is given the right to occupy and to the enjoyment and use of a tract of land for a term, while the ownership of the parcel remains vested in the grantor. The grantor owns the land and is entitled tothe lease rents, but during the term of the lease is not entitled to enter and occupy the land which right has been vested in the lessee (except as expressly provided fro in the lease).
Similarly, an owner of land might grant another an easement to make some partial use of the land, without actually owning it. In antiquity, easements would have primarily been for highways, roads or pathways. But easements might extend to rights beyond merely crossing the land, such as an easement to cross to a well and to draw water from the well, or a right to cross another's property to reach a freshwater spring or a navigable stream or river, either for transportation or navigation or to draw water, wash cloths, or anything else that neighbors might agree to allow.
Easements might be at will, for a term or perpetual. The easement itself might be associated with a neighboring parcel or could be independent of it.
Yet another variant is for mineral rights to a parcel to be deeded separately from the ownership of surface ownership rights. This isn't particularly common in urban residential areas, but is quite common in rural areas where subsurface oil, gas, coal or minerals might be present, whether actually produced or not.
I use these examples to illustrate a variety of ways in which someone might share various interests in a particular parcel of real estate.
A mortgage or a deed of trust is simply another such interest. The grantee of the mortgage or deed of trust obtains a security interest in the property pursuant to the terms of the mortgage, deed of trust or other security instrument.
Conveyance of Interests
Generally, when one conveys a fee interest in a parcel of land, this is usually done by written deed, though this is not the exclusive method. One would similarly deed mineral rights.
One more commonly refers to the assignment of a lease, when the lease allows for such an assignment.
With a mortgage or a deed of trust, the means of transfering an ownership interest in the mortgage, deed of trust or other security instrument is usually an assignment rather than a deed. And in most places, it would be appropriate for the owner of the mortgage or deed of trust to be the grantor of such an assignment.
Forum contributor Bill has emphasized in a number of posts that the mortgage or deed of trust automatically follows the note and this is partially, but not completely true. What is true is that the equitable right to the mortgage or deed of trust follows the note. As is shown within the Ibanez decision, but which is also actually the law in most other places (though this seems to be mostly forgotten) is that the legal title to the mortgage or deed of trust remains vested in the original grantee, absent a written assignment.
So if A is the owner and holder of a note as well as the grantee and owner of a mortgage or deed of trust, A's valid negotiation of the note would typically carry with it an equitable right to the mortgage or deed of trust. The legal title to the mortgage or deed of trust would follow with a written assignment.
Good practice would be for the written assignment to be made concurrently with the negotiation of the note.
Here it is helpful to note that if a note was validly and successfully negotiated to a subsequent mortgage investor or other holder and that subsequent holder was a valid holder under the UCC at the commencement of a judicial foreclosure action, this holder would seem likely to have standing at the commencement of the suit, at least in respect of the first count of a typical complaint, which is usually a count for a judgment on the note.
Very often, the foreclosure complaint contains a second count seekign foreclosure of the mortgage.
If the plaintiff was a valid holder at commencement, then it is unlikely that a defendant would be entitled to the dismissal of the suit due to a lack of plaintiff standing.
By contrast, if a plaintiff was only the holder and lacked any interest in the mortgage or deed of trust at commencement, a defendant might be entitled to a dismissal of the second count (foreclosure) only. And if the plaintiff later obtained a valid interest in the mortgage or deed of trust after commencement, then the plaintiff would usually seem to be entitled to amend its complaint to add back in the foreclosure count.
For this reason, Bill is correct to focus on the plaintiff's right as holder to enforce the note.
MERS Mortgages Including MOM Mortgages
There are two ways that MERS becomes a mortgagee of record for mortgages and deeds of trust. The original way was for the mortgagee (Lender / Original grantee) to assign the mortgage to MERS after the mortgage or deed of trust was executed.
Later, MERS developed a form language to insert into the instrument naming MERS as a mortgagee or beneficiary under the original mortgage instrument.
The language as to MERS differs slightly from place to place, but is mostly uniform within a particular state.
These latter mortgages are described by MERS and its members / customers as "MERS as Original Mortgagee" or "MOM" mortgages.
When there is no language describing MERS in the original instrument, MERS would have NO INTEREST in the mortgage or deed of trust, absent a valid written assignment of that interest. By contrast, when a MOM mortgage is used, it is MERS' and the industry's position that MERS is the mortgagee of the mortgage or deed of trust.
Given the facts you indicate in your post, the first thing you need to do is to carefully read the exact language of the deed of trust to see if MERS is mentioned therein. If MERS is expressly mentioned, then you have a so-called MOM deed of trust. If it is NOT mentioned, then MERS could only have acquired an interest by assignment. When you say in your post that MERS is on the DOT as beneficiary", this seems to indicate that yours is a "MOM" deed of trust.
If MERS is NOT shown in your original deed of trust, there exist several possibilities as to the situation you otherwise describe. I am going to dispense with discussing these because it seems that yours is likely to be a MOM deed of trust and that would seem to be the end of the matter.
Your question as to the validity and efficacy of the MERS assignment doesn't end there, though. The precise language appearing within the instrument may indicate that MERS is acting solely as nominee for the Lender. This can be problematic, particularly when the originating Lender is no longer in business.
A question exists as to whether the language in the deed of trust makes MERS the owner of the deed of trust with an independent right to convey or whether merely as nominee (agent) of the Lender whether any right is extinguished with the demise of the Lender.
Unfortunately, the cases which seem to show some question about the authority of MERS to act for a defunct principal are most not in non-judicial foreclosure states.
And distressed borrowers in non-judicial foreclosure states have, to date, had very little success in resisting foreclosures, EXCEPT very recently in Nevada. Distressed borrowers have generally had the greatest success in non-judicial foreclosure states in resisting foreclosure defensively within U.S. Bankruptcy Courts.
Other approaches to foreclosure defense in non-judicial foreclosure states, such as seeking a TRO have been mostly ineffective. You might be able to buy a little time this way, but hardly enough to pay for the attorney.