An Express Article from the California Land Title Association
Bulletin 10/11-68 - February 28, 2011
On February 18th the California Court of Appeal in San Diego ruled that a borrower cannot challenge a foreclosure action commenced by MERS to determine whether the owner of the note has authorized MERS to initiate the foreclosure. The court decided that California’s nonjudicial foreclosure law provides a comprehensive framework for nonjudicial foreclosures and that there was no legal basis to interject the courts into that framework. The court noted that the borrower was seeking to impose a requirement that MERS demonstrate in court that it was authorized to initiate a foreclosure. The court explained that such a requirement would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy.
The court of appeal focused on California law and declined to follow cases from outside the state which were not based on California law. In the case before the court the borrower failed to assert any factual basis to suspect that MERS lacked authority to proceed with the foreclosure. Rather the borrower simply sought the right to bring a speculative lawsuit to find out whether MERS had such authority. The court concluded that neither case law nor statute authorized such a suit.
The court went on to state that the borrower also agreed in the deed of trust that MERS was authorized to initiate a foreclosure. According to the court, the deed of trust contained no suggestion that the lender or its successors and assigns must provide the borrower assurance that MERS was authorized to foreclose. Relying on the terms of the deed of trust the court reasoned that by entering into the deed of trust the borrower agreed that MERS had the authority to initiate the foreclosure.